Registration No. 33- .
As filed with the Securities and Exchange Commission on November 2, 1995
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ___ [ ]
(Check appropriate box or boxes)
Exact name of Registrant as Specified in Charter:
FIRST AMERICAN INVESTMENT FUNDS, INC.
Area Code and Telephone Number:
(610) 254-1924
Address of Principal Executive Offices:
680 East Swedesford Road
Wayne, Pennsylvania 19087
Name and Address of Agent for Service:
David G. Lee
c/o SEI Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
Copy to:
Kathryn L. Stanton, Esq. James D. Alt, Esq.
SEI Corporation Dorsey & Whitney P.L.L.P.
680 East Swedesford Road 220 South Sixth Street
Wayne, Pennsylvania 19087 Minneapolis, Minnesota 55402
Approximate Date of Proposed Public Offering:
As soon as possible following the effective date of this Registration Statement.
It is proposed that this filing become effective on December 2, 1995 (30 days
after filing) pursuant to Rule 488.
______________________________________________________________________________
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant is filing as an exhibit to this Registration Statement a copy of its
earlier declaration under Rule 24f-2. Registrant filed its Rule 24f-2 Notice on
November 16, 1994 for its fiscal year ended September 30, 1994.
FIRST AMERICAN INVESTMENT FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-14
CROSS REFERENCE SHEET
(as required by Rule 481(a))
<TABLE>
<CAPTION>
PART A OF FORM N-14 PROSPECTUS/PROXY STATEMENT CAPTION
<S> <C> <C>
1 Beginning of Registration Statement and Outside Front Cover Page of
Prospectus ........................................................... Cross Reference Sheet and Cover Page
2. Beginning and Outside Back Cover Page of Prospectus .................. Table of Contents
3. Synopsis Information and Risk Factors ................................ Summary; Risk Factors
4. Information about the Transaction .................................... Summary; Information About the
Reorganization; Voting Information
5. Information about the Registrant ..................................... Inside Front Cover (Incorporation by
Reference); Summary; Information About
the Acquired Fund and the Acquiring Fund
6. Information about the Company being Acquired ......................... Inside Front Cover (Incorporation by
Reference); Summary; Information About
the Acquired Fund and the Acquiring Fund
7. Voting Information ................................................... Summary; Information About the Reorganization;
Voting Information
8. Interest of Certain Persons and Experts .............................. Voting Information
9. Additional Information ............................................... Not Applicable
STATEMENT OF ADDITIONAL
PART B OF FORM N-14 INFORMATION CAPTION
10. Cover Page ........................................................... Cover Page
11. Table of Contents .................................................... Not Applicable
12. Additional Information about the Registrant .......................... Cover Page (Incorporation by Reference)
13. Additional Information about the Company Being Acquired .............. Cover Page (Incorporation by Reference)
14. Financial Statements ................................................. Cover Page (Incorporation by Reference)
</TABLE>
PART C OF FORM N-14
Information required to be included in Part C is set forth under the appropriate
item in Part C of this Registration Statement.
FIRST AMERICAN INVESTMENT FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-14
PART A
PRESIDENT'S LETTER
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
PROSPECTUS/PROXY STATEMENT
CURRENT RETAIL CLASS PROSPECTUS OF STOCK FUND AND LIMITED VOLATILITY STOCK FUND
CURRENT INSTITUTIONAL CLASS PROSPECTUS OF STOCK FUND
AND LIMITED VOLATILITY STOCK FUND
ANNUAL REPORT OF FAIF FOR THE YEAR ENDED SEPTEMBER 30, 1994
FIRST AMERICAN INVESTMENT FUNDS, INC. December 18, 1995
To the Shareholders of Limited Volatility Stock Fund:
Enclosed with this letter is a proxy voting ballot, a Prospectus/Proxy
Statement and related information concerning a Special Meeting of Shareholders
of the Limited Volatility Stock Fund of First American Investment Funds, Inc.
("FAIF") to be held on Monday, January 22, 1996. The purpose of this Special
Meeting is to submit to shareholders of Limited Volatility Stock Fund a proposal
to combine that Fund with and into FAIF's Stock Fund by means of the
reorganization described in the Prospectus/Proxy Statement.
If the proposed combination of Funds is approved, you will receive the same
class of shares in Stock Fund that you currently hold in Limited Volatility
Stock Fund. The exchange of shares will take place on the basis of the relative
net asset values per share of the respective classes of the two Funds.
Investment advisory fees, sales charges, and Rule 12b-1 distribution and
shareholder servicing fees all will remain unchanged.
At September 30, 1995, Limited Volatility Stock Fund had net assets of only
approximately $17 million, while Stock Fund had net assets of approximately $333
million. As described in the Prospectus/Proxy Statement, FAIF's Board of
Directors believes that the proposed combination of Funds is in the best
interests of Limited Volatility Stock Fund shareholders because, among other
things, it is expected to lower the total expense ratio experienced by such
shareholders (before fee waivers, if any) due to the economies of scale
associated with becoming part of a larger Fund.
Although the investment objectives of the two Funds are similar in that
both seek capital appreciation and income, shareholders should carefully
consider both the similarities and the differences between the two Funds. These
similarities and differences, as well as other important information concerning
the proposed combination of Funds, are described in detail in the
Prospectus/Proxy Statement, which you are encouraged to review carefully. If you
have any additional questions, please call your account administrator,
investment sales representative, or FAIF directly at 1-800-637-2548.
FAIF's Board of Directors has approved the proposed combination of Funds
and recommends it for your approval. I encourage you to vote in favor of the
proposal, and ask that you please send your completed proxy ballot in as soon as
possible to help save the cost of additional solicitations. As always, we thank
you for your confidence and support.
Sincerely,
David G. Lee
President
LIMITED VOLATILITY STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA
(800) 637-2548
________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1996
December 18, 1995
To the Shareholders of Limited Volatility Stock Fund:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Limited
Volatility Stock Fund (the "Acquired Fund"), a separately managed series of
First American Investment Funds, Inc. ("FAIF") will be held at 10:00 a.m.,
Eastern time, on Monday, January 22, 1996, at the offices of SEI Corporation,
680 East Swedesford Road, Wayne Pennsylvania, First Floor, Management Conference
Room. The purpose of the special meeting is as follows:
1. To consider and vote on a proposed Agreement and Plan of
Reorganization (the "Plan") providing for (a) the acquisition of all
of the assets and the assumption of all liabilities of the Acquired
Fund by Stock Fund (the "Acquiring Fund"), a separately managed series
of FAIF, in exchange for shares of common stock of the Acquiring Fund
having an aggregate net asset value equal to the aggregate value of
the assets acquired (less the liabilities assumed) of the Acquired
Fund and (b) the liquidation of the Acquired Fund and the pro rata
distribution of the Acquiring Fund shares to Acquired Fund
shareholders. Under the Plan, Acquired Fund shareholders will receive
the same class of shares of the Acquiring Fund that they held in the
Acquired Fund, having a net asset value equal as of the effective time
of the Plan to the net asset value of their Acquired Fund shares. A
vote in favor of the Plan will be considered a vote in favor of an
amendment to the articles of incorporation of FAIF required to effect
the reorganization contemplated by the Plan.
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Even if Acquired Fund shareholders vote to approve the Plan, consummation
of the Plan is subject to certain other conditions. See "Information About the
Reorganization -- Plan of Reorganization" in the attached Prospectus/Proxy
Statement.
THE BOARD OF DIRECTORS OF FAIF RECOMMENDS APPROVAL OF THE PLAN.
The close of business on December 11, 1995 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournments or postponements thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE RESPECTFULLY ASK FOR
YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY. If you are present at the
meeting, you may then revoke your proxy and vote in person, as explained in the
Prospectus/Proxy Statement in the section entitled "Voting Information."
By Order of the Board of Directors,
MICHAEL J. RADMER
Secretary
PROSPECTUS/PROXY STATEMENT
DATED DECEMBER 18, 1995
ACQUISITION OF THE ASSETS OF
LIMITED VOLATILITY STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(800) 637-2548
BY AND IN EXCHANGE FOR SHARES OF
STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(800) 637-2548
This Prospectus/Proxy Statement is being furnished to the shareholders of
Limited Volatility Stock Fund (the "Acquired Fund"), a separately managed series
of First American Investment Funds, Inc. ("FAIF"), in connection with a special
meeting (the "Meeting") of the shareholders of the Acquired Fund to be held at
the offices of SEI Corporation, 680 East Swedesford Road, Wayne, Pennsylvania on
Monday, January 22, 1996, for the purposes set forth in the accompanying Notice
of Special Meeting of Shareholders. This Prospectus/Proxy Statement is first
being mailed to shareholders of the Acquired Fund on or about December 18, 1995.
Information concerning the voting rights of each Acquired Fund shareholder is
set forth under "Voting Information" below. Directors and officers of FAIF and
employees of SEI Financial Management Company, the administrator for the
Acquired Fund, may, without cost to the Acquired Fund, solicit proxies for
management of the Acquired Fund by means of mail, telephone, or personal calls.
Persons holding shares as nominees will, upon request, be reimbursed for their
reasonable expenses incurred in sending proxy soliciting materials on behalf of
the Board of Directors to their principals.
As set forth in the Notice of Special Meeting of Shareholders, this
Prospectus/Proxy Statement relates to a proposed Agreement and Plan of
Reorganization (the "Plan") providing for (i) the acquisition of all the assets
and the assumption of all liabilities of the Acquired Fund by Stock Fund (the
"Acquiring Fund"), a separately managed series of FAIF, in exchange for shares
of common stock of the Acquiring Fund having an aggregate net asset value equal
to the aggregate value of the assets acquired (less liabilities assumed) of the
Acquired Fund, and (ii) the liquidation of the Acquired Fund and the pro rata
distribution of its holdings of Acquiring Fund shares to Acquired Fund
shareholders. The Acquired Fund and the Acquiring Fund are sometimes referred to
herein, individually, as a "Fund," or together, as the "Funds." A vote in favor
of the Plan will be considered a vote in favor of an amendment to the articles
of incorporation of FAIF required to effect the reorganization contemplated by
the Plan.
As a result of the transactions contemplated by the Plan (collectively, the
"Reorganization"), each shareholder of the Acquired Fund will receive Acquiring
Fund shares of the same class that he or she held in the Acquired Fund, with a
net asset value equal at the effective time of the Reorganization to the net
asset value of the shareholder's Acquired Fund shares at such time. The
Reorganization is being structured as a tax-free reorganization so that no
income, gain or loss will be recognized by the Acquired Fund or its shareholders
as a result thereof (except that the Acquired Fund contemplates that it will
make a distribution, immediately prior to the Reorganization, of all of its net
income and net realized capital gains, if any, not previously distributed, and
this distribution will be taxable to Acquired Fund shareholders subject to
taxation). The shareholders of the Acquired Fund are being asked to vote on the
proposed Plan and Reorganization at the Meeting.
In addition to the approval of the Plan and Reorganization by Acquired Fund
shareholders, the consummation of the Reorganization is subject to certain other
conditions. See "Information About the Reorganization -- Plan of
Reorganization."
FAIF, of which the Acquired Fund and the Acquiring Fund are separate
series, is an open-end management investment company. The Acquired Fund and the
Acquiring Fund are both diversified, open-end funds with investment objectives
which are similar, in that both seek capital appreciation and income.
Specifically:
* The Acquired Fund has a primary objective of maximizing total return
(capital appreciation plus income) within the constraint of
controlling the volatility of the Acquired Fund to a level below that
of the major market indices such as the S&P 500 and the Dow Jones
Industrial Average. In this respect, the Acquired Fund seeks to
maintain a five year historical performance relative to the S&P 500 at
a beta level no greater than .95. A secondary objective of the
Acquired Fund is to provide current income at a level that exceeds
that of the S&P 500.
* The Acquiring Fund has a primary objective of capital appreciation. A
secondary objective of the Acquiring Fund is to provide current
income.
In addition, the investment policies of the Acquired Fund and the Acquiring Fund
are substantially identical. Under normal market conditions, both Funds invest
at least 80% of their total assets in equity securities (and at least 65% in
common stocks) diversified among a broad range of industries and among companies
that have a market capitalization of at least $500 million. Both Funds also are
permitted to invest up to 20% of their total assets in the aggregate in equity
securities of issuers with a market capitalization of less than $500 million and
in specified kinds of fixed income securities which are the same for both Funds.
Moreover, the fundamental and non-fundamental investment restrictions applicable
to the two Funds are substantially similar. The Funds' investment objectives,
policies and restrictions are described and compared in further detail herein
under "Information About the Acquired Fund and the Acquiring Fund -- Comparison
of Investment Objectives, Policies and Restrictions."
Based on the historical performance and current portfolio composition of
the respective Funds, the Funds' investment adviser expects that the level of
net investment income of the respective classes of Acquiring Fund shares issued
in the Reorganization will be somewhat lower than the historical level of net
investment income on the respective classes of Acquired Fund shares and somewhat
lower than the dividend yield of the S&P 500. However, during the five years
ended September 30, 1995, the Acquiring Fund met the Acquired Fund's investment
objective with respect to volatility. See "Summary -- Investment Objectives,
Policies and Restrictions" herein.
First Bank National Association ("FBNA" or the "Manager") serves as the
investment adviser to both the Acquired Fund and the Acquiring Fund.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the proposed Plan and
Reorganization and about the Acquiring Fund and its affiliates that each
Acquired Fund shareholder should know prior to voting on the proposed Plan and
Reorganization.
INCORPORATION BY REFERENCE
The documents listed in items 1 and 2 below, which have been filed with the
Securities and Exchange Commission (the "Commission"), are incorporated herein
by reference to the extent noted below. A Statement of Additional Information
dated December 18, 1995 relating to this Prospectus/Proxy Statement has been
filed with the Commission and is also incorporated by reference into this
Prospectus/Proxy Statement. A copy of the Statement of Additional Information,
and of the documents listed in items 3 and 4 below, is available upon request
and without charge by writing to SEI Financial Services Company, 680 East
Swedesford Road, Wayne, Pennsylvania 19087 or by calling (800) 637-2548. The
documents listed in items 2, 3 and 4 below are incorporated by reference into
the Statement of Additional Information and will be provided with any copy of
the Statement of Additional Information which is requested. Any documents
requested will be sent within one business day of receipt of the request by
first class mail or other means designed to ensure equally prompt delivery.
1. The Retail Class Prospectus dated January 31, 1995 and the
Institutional Class Prospectus dated January 31, 1995 of the Acquiring
Fund and the Acquired Fund are incorporated herein in their entirety
by reference, and a copy of each accompanies this Prospectus/Proxy
Statement.
2. The "Portfolio Performance Discussion" for the Acquiring Fund set
forth at page 11 of FAIF's Annual Report for the year ended September
30, 1994 is incorporated herein by reference, and a copy of such
Annual Report accompanies this Prospectus/Proxy Statement. Such Annual
Report, as it relates to the Retail Classes and the Institutional
Class of the Acquiring Fund (the Acquired Fund not having commenced
operations during such period), is incorporated by reference in the
Statement of Additional Information relating to this Prospectus/Proxy
Statement.
3. The Statement of Additional Information dated January 31, 1995 of
FAIF, as it relates to the Retail Classes and the Institutional Class
of both the Acquired Fund and the Acquiring Fund, is incorporated by
reference in the Statement of Additional Information relating to this
Prospectus/Proxy Statement.
4. The Semi-Annual Report of FAIF for the six months ended March 31,
1995, as it relates to the Retail Classes and the Institutional Class
of both the Acquired Fund and the Acquiring Fund, is incorporated by
reference in the Statement of Additional Information relating to this
Prospectus/Proxy Statement.
Also accompanying and attached to this Prospectus/Proxy Statement as Exhibit A
is a copy of the Plan for the proposed Reorganization.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, the
Prospectuses and Statement of Additional Information of FAIF relating to the
Acquiring Fund and the Acquired Fund, each dated January 31, 1995, and the Plan,
a copy of which is attached to this Prospectus/Proxy Statement as Exhibit A.
Acquired Fund shareholders should review the accompanying documents carefully in
connection with their review of this Prospectus/Proxy Statement.
PROPOSED REORGANIZATION
The Plan provides for (i) the acquisition of all of the assets and the
assumption of all liabilities of the Acquired Fund by the Acquiring Fund in
exchange for shares of common stock of the Acquiring Fund having an aggregate
net asset value equal to the aggregate value of the assets acquired (less
liabilities assumed) of the Acquired Fund and (ii) the liquidation of the
Acquired Fund and the pro rata distribution of its holdings of Acquiring Fund
shares to Acquired Fund shareholders as of the effective time of the
Reorganization (the close of normal trading on the New York Stock Exchange,
currently 4:00 p.m. Eastern Time, on January 31, 1996, or such later date as
provided for in the Plan) (such time and date, the "Effective Time"). The value
of the Acquired Fund assets and liabilities to be acquired by the Acquiring
Fund, and the value of the Acquiring Fund shares to be exchanged therefor, will
be computed as of the Effective Time. As a result of the Reorganization, each
shareholder of the Acquired Fund will receive Acquiring Fund shares of the same
class that he or she held in the Acquired Fund, with a net asset value equal to
the net asset value of the shareholder's Acquired Fund shares as of the
Effective Time. See "Information About the Reorganization."
For the reasons set forth below under "Information About the Reorganization
- -- Reasons for the Reorganization," the Board of Directors of FAIF, including
all of the "non-interested" Directors, as that term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act"), has concluded
that the Reorganization would be in the best interests of the shareholders of
the Acquired Fund and that the interests of Acquired Fund's existing
shareholders would not be diluted as a result of the transactions contemplated
by the Reorganization. Therefore, the Board of Directors has approved the
Reorganization and has submitted the Plan for approval by Acquired Fund
shareholders.
The Board of Directors of FAIF has also concluded that the Reorganization
would be in the best interests of the Acquiring Fund's existing shareholders and
has therefore approved the Reorganization on behalf of the Acquiring Fund.
Approval of the Plan and Reorganization will require the affirmative vote
of a majority of the outstanding shares of each class of the Acquired Fund,
voting as separate classes.
TAX CONSEQUENCES
Prior to completion of the Reorganization, FAIF, on behalf of the Acquired
Fund, will have received from counsel an opinion that, upon the Reorganization
and the transfer of the assets of the Acquired Fund, no gain or loss will be
recognized by the Acquired Fund or its shareholders for federal income tax
purposes. The holding period and aggregate tax basis of Acquiring Fund shares
that are received by each Acquired Fund shareholder will be the same as the
holding period and aggregate tax basis of the Acquired Fund shares previously
held by such shareholders. In addition, the holding period and tax basis of the
assets of the Acquired Fund in the hands of the Acquiring Fund as a result of
the Reorganization will be the same as in the hands of the Acquired Fund
immediately prior to the Reorganization. See "Information About the
Reorganization -- Federal Income Tax Consequences."
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The Acquired Fund and the Acquiring Fund are both diversified, open-end
funds with investment objectives which are similar, in that both seek capital
appreciation and income. Specifically:
* The Acquired Fund has a primary objective of maximizing total return
(capital appreciation plus income) within the constraint of
controlling the volatility of the Acquired Fund to a level below that
of the major market indices such as the S&P 500 and the Dow Jones
Industrial Average. In this respect, the Acquired Fund seeks to
maintain a five year historical performance relative to the S&P 500 at
a beta level no greater than .95. A secondary objective of the
Acquired Fund is to provide current income at a level that exceeds
that of the S&P 500.
* The Acquiring Fund has a primary objective of capital appreciation. A
secondary objective of the Acquiring Fund is to provide current
income.
In addition, the investment policies of the Acquired Fund and the Acquiring Fund
are substantially identical. Under normal market conditions, both Funds invest
at least 80% of their total assets in equity securities (and at least 65% in
common stocks) diversified among a broad range of industries and among companies
that have a market capitalization of at least $500 million. Both Funds also are
permitted to invest up to 20% of their total assets in the aggregate in equity
securities of issuers with a market capitalization of less than $500 million and
in specified kinds of fixed income securities which are the same for both Funds.
Moreover, the fundamental and non-fundamental investment restrictions applicable
to the two Funds are substantially similar. The Funds' investment objectives,
policies and restrictions are described and compared in further detail herein
under "Information About the Acquired Fund and the Acquiring Fund -- Comparison
of Investment Objectives, Policies and Restrictions."
Based on the historical performance and current portfolio composition of
the respective Funds, the Funds' investment adviser expects that the level of
net investment income of the respective classes of Acquiring Fund shares issued
in the Reorganization will be somewhat lower than the historical level of net
investment income on the respective classes of Acquired Fund shares and somewhat
lower than the dividend yield of the S&P 500. The following table sets forth the
annualized ratio of net investment income to average net assets for the
respective classes of the two Funds for the period ended September 30, 1995:
NET INVESTMENT INCOME
ACQUIRED FUND ACQUIRING FUND
Class A * 1.89%
Class B * 1.10%
Class C 2.75% 2.10%
* No Class A or Class B shares of the Acquired Fund were outstanding
during this period.
At September 30, 1995 the dividend yield of the S&P 500 was 2.3%, based on that
day's closing prices. Shareholders should recognize that net investment income
is only one component of a fund's total return. For the year ended September 30,
1995, the total return of the Acquired Fund and the Acquiring Fund were as
follows:
TOTAL RETURN*
ACQUIRED FUND ACQUIRING FUND
Class A ** 25.26%
Class B ** 24.20%
Class C 21.93% 25.50%
* Returns, excluding sales charges, are for the period indicated and
have not been annualized. The Acquired Fund was not in operation for
the entire period.
** No Class A or Class B shares of the Acquired Fund were outstanding
during this period.
Inasmuch as the Acquired Fund only commenced operations on November 15,
1994, its beta level cannot be compared with the five year historical beta of
the S&P 500. The five year historical beta level of the Acquiring Fund relative
to the S&P 500 for the period ended September 30, 1995 was approximately 0.7.
Thus, during this five-year period the Acquiring Fund met the Acquired Fund's
investment objective with respect to volatility.
The Semi-Annual Report of FAIF for the six months ended March 31, 1995,
referred to above under "Incorporation by Reference," provides information
concerning the percentages of the respective Funds' assets invested in various
industries at March 31, 1995.
FEES AND EXPENSES
The Acquired Fund and the Acquiring Fund each have agreements with the
Manager pursuant to which they pay the Manager investment advisory fees for
managing their respective investment portfolios. The investment advisory fees
for the two Funds accrue at the same rate, equal to an annual rate of 0.70% of
the applicable Fund's average daily assets. Investment advisory fees therefore
will remain unchanged as a result of the Reorganization.
The Acquired Fund and the Acquiring Fund both offer shares in three
classes: Class A, Class B, and Class C. Class A shares and Class B shares are
sometimes referred to collectively as "Retail Class" shares, and Class C shares
sometimes are referred to as "Institutional Class" shares. With respect to both
Funds, these classes are subject to the following charges:
* Class A shares of both the Acquired Fund and the Acquiring Fund are
subject to a front-end sales charge of 4.50%. The front-end sales
charge on Class A shares of both Funds is waived in full on purchases
of $1 million or more, but a 1% deferred sales charge is collected if
shares subject to such a waiver are sold within 24 months after
purchase. No Class A shares of either Fund are subject to any other
contingent deferred sales charge or other sales charges or to any
redemption fee. Class A shares of both Funds are subject to
distribution fees equaling 0.25% per annum of average daily net assets
under FAIF's Rule 12b-1 plan of distribution, which is a
compensation-type plan.
* Class B shares of both the Acquired Fund and the Acquiring Fund are
subject to no front-end sales charge. Class B shares of both Funds are
subject to a contingent deferred sales charge declining from 5% in the
first year following purchase to 0% after six years and to Rule 12b-1
distribution and shareholder servicing fees of 1.00% per annum of
average daily net assets under compensation-type plans. Eight years
after purchase, Class B shares of both Funds automatically convert to
Class A shares.
* Class C shares of both the Acquired Fund and the Acquiring Fund are
subject to no front-end, contingent deferred or other sales charges,
no redemption fee and no Rule 12b-1 distribution or shareholder
servicing fees.
As described below, in the Reorganization Class A shares of the Acquired Fund
will be exchanged for Class A shares of the Acquiring Fund, Class B shares will
be exchanged for Class B shares, and Class C shares will be exchanged for Class
C shares. Therefore, sales charges, Rule 12b-1 fees and shareholder servicing
fees will remain unchanged as a result of the Reorganization. In addition, the
Plan provides that former holders of Acquired Fund Class B shares who receive
Acquiring Fund Class B shares in the Reorganization will receive credit for the
period they held Acquired Fund Class B shares in applying the six-year step-down
of the contingent deferred sales charge on Acquiring Fund Class B shares and in
determining the date upon which such shares convert to Acquiring Fund Class A
shares. Similarly, the Plan provides that in applying the 24-month 1% deferred
sales charge on purchases of Class A shares with respect to which the front-end
sales charge was waived, credit will be given for the period a former Acquired
Fund shareholder who is subject to such a deferred sales charge held his or her
shares.
Through January 31, 1996, the Manager is waiving its advisory fee to the
extent that total fund expenses exceed the following percentages of average net
assets of the respective Funds and classes on a per annum basis:
Class A Class B Class C
Acquired Fund 1.00% 1.75% 0.75%
Acquiring Fund 1.05% 1.80% 0.80%
The Manager has not agreed to waive advisory fees in any set amount after
January 31, 1996, which is the earliest date upon which the Reorganization can
take effect. The Manager has represented, however, that if any such waiver is
made after such date and if the proposed Reorganization is not completed, the
Manager intends that the total expense "caps" thereunder would be the same for
the Acquired Fund and the Acquiring Fund. Therefore, in no event will the
holders of Acquired Fund shares become subject to a less advantageous total
expense "cap" as a result of the proposed Reorganization.
PRO FORMA FEES AND EXPENSES
The following tables are intended to assist Acquired Fund shareholders of
the respective classes in understanding the various costs and expenses
(expressed as a percentage of average net assets) (i) that such shareholders
currently bear as Acquired Fund shareholders (under the "Acquired Fund" column);
(ii) that shareholders of the Acquiring Fund currently bear (under the
"Acquiring Fund" column); and (iii) that such shareholders can expect to bear as
Acquiring Fund shareholders after the Reorganization is consummated (under the
"Pro Forma" column). The following tables are as of September 30, 1995.
CLASS A SHARES FEES AND EXPENSES
ACQUIRED ACQUIRING
FUND FUND PRO FORMA
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases (as a
percentage of offering price)(1) 4.50% 4.50% 4.50%
Maximum sales load imposed on
reinvested dividends None None None
Deferred sales load(1) None None None
Redemption fees None None None
Exchange fees None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment advisory fees (after voluntary
fee waivers and reimbursements(2) 0.24% 0.57% 0.57%
Rule 12b-1 fees (after voluntary
waivers)(2) 0.25% 0.25% 0.25%
Other expenses(2) 0.51% 0.23% 0.23%
Total fund operating expenses
(after voluntary fee waivers and
reimbursements)(2) 1.00% 1.05% 1.05%
EXAMPLE(3)
You would pay the following expenses on a $1,000 investment, assuming (i)
the maximum applicable sales charge; (ii) a 5% annual return; and (iii)
redemption at the end of each time period:
1 year $ 55 $ 55 $ 55
3 years $ 75 $ 77 $ 77
5 years $ 98 $100 $100
10 years $162 $167 $167
(1) The rules of the Securities and Exchange Commission require that the
maximum sales charge be reflected in the above table. However, certain
investors may qualify for reduced sales charges. Purchases of $1 million or
more of Class A Shares are not subject to an initial sales charge, but a
contingent deferred sales charge of 1.00% is imposed in the case of
redemption within 24 months following the purchase.
(2) Total fund operating expenses are based on fee waivers which expire January
31, 1996. See "-- Fees and Expenses" above. Absent any fee waivers,
investment advisory fees as an annualized percentage of average daily net
assets would be 0.70% (Acquired Fund), 0.70% (Acquiring Fund), and 0.70%
(Pro Forma); Rule 12b-1 fees would be 0.25% (Acquired Fund), 0.25%
(Acquiring Fund), and 0.25% (Pro Forma); and total fund operating expenses
would be 1.46% (Acquired Fund), 1.19% (Acquiring Fund), and 1.19% (Pro
Forma). Other expenses includes an administration fee and is based on
estimated amounts for the current fiscal year.
(3) Absent fee waivers and reimbursements, the respective dollar amounts for
the 1, 3, 5, and 10-year periods would be $59, $89, $121, and $212
(Acquired Fund); $57, $81, $107, and $183 (Acquiring Fund); and $57, $81,
$107, and $183 (Pro Forma).
CLASS B SHARES FEES AND EXPENSES
ACQUIRED ACQUIRING
FUND FUND PRO FORMA
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases
(as a percentage of offering price) None None None
Maximum sales load imposed on reinvested
dividends None None None
Maximum contingent deferred sales charge
(as a percentage of original purchase
price or redemption proceeds, as applicable) 5.00% 5.00% 5.00%
Redemption fees None None None
Exchange fees None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment advisory fees (after voluntary
fee waivers and reimbursements(1) 0.24% 0.57% 0.57%
Rule 12b-1 fees 1.00% 1.00% 1.00%
Other expenses(1) 0.51% 0.23% 0.23%
Total fund operating expenses
(after voluntary fee waivers and
reimbursements)(1) 1.75% 1.80% 1.80%
EXAMPLE (ASSUMING REDEMPTION)(2)
You would pay the following expenses on a $1,000 investment, assuming (i) a
5% annual return; (ii) redemption at the end of each time period; and (iii)
payment of the maximum applicable contingent deferred sales charge of 5% in
year 1, 4% in year 3, 2% in year 5, and automatic conversion to Class A
shares at the end of year 8:
1 year $ 68 $ 68 $ 68
3 years $ 95 $ 97 $ 97
5 years $115 $117 $117
10 years $186 $192 $192
EXAMPLE (ASSUMING NO REDEMPTION)(3)
You would pay the following expenses on the same investment, assuming no
redemption:
1 year $ 18 $ 18 $ 18
3 years $ 55 $ 57 $ 57
5 years $ 95 $ 97 $ 97
10 years $186 $192 $192
(1) Total fund operating expenses are based on fee waivers which expire January
31, 1996. See "-- Fees and Expenses" above. Absent any fee waivers,
investment advisory fees as an annualized percentage of average daily net
assets would be 0.70% (Acquired Fund), 0.70% (Acquiring Fund), and 0.70%
(Pro Forma); and total fund operating expenses would be 2.21% (Acquired
Fund), 1.94% (Acquiring Fund), and 1.94% (Pro Forma). Other expenses
includes an administration fee and is based on estimated amounts for the
current fiscal year.
(2) Absent fee waivers and reimbursements, the respective dollar amounts for
the 1, 3, 5, and 10-year periods would be $72, $109, $138, and $235
(Acquired Fund); $70, $101, $125, and $207 (Acquiring Fund); and $70, $101,
$125, and $207 (Pro Forma).
(3) Absent fee waivers and reimbursements, the respective dollar amounts for
the 1, 3, 5, and 10-year periods would be $22, $69, $118, and $235
(Acquired Fund); $20, $61, $105, and $207 (Acquiring Fund); and $20, $61,
$105, and $207 (Pro Forma).
CLASS C SHARES FEES AND EXPENSES
ACQUIRED ACQUIRING
FUND FUND PRO FORMA
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases (as a
percentage of offering price) None None None
Maximum sales load imposed on reinvested
dividends None None None
Deferred sales load None None None
Redemption fees None None None
Exchange fees None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment advisory fees (after voluntary fee
waivers and reimbursements(1) 0.24% 0.57% 0.57%
Rule 12b-1 fees None None None
Other expenses(1) 0.51% 0.23% 0.23%
Total fund operating expenses (after voluntary
fee waivers and reimbursements)(1) 0.75% 0.80% 0.80%
EXAMPLE (ASSUMING REDEMPTION)(2)
You would pay the following expenses on a $1,000 investment, assuming (i) a
5% annual return, and (ii) redemption at the end of each time period:
1 year $ 8 $ 8 $ 8
3 years $ 24 $ 26 $ 26
5 years $ 42 $ 44 $ 44
10 years $ 93 $ 99 $ 99
(1) Total fund operating expenses are based on fee waivers which expire January
31, 1996. See "-- Fees and Expenses" above. Absent any fee waivers,
investment advisory fees as an annualized percentage of average daily net
assets would be 0.70% (Acquired Fund), 0.70% (Acquiring Fund), and 0.70%
(Pro Forma); and total fund operating expenses would be 1.21% (Acquired
Fund), 0.94% (Acquiring Fund), and 0.94% (Pro Forma). Other expenses
includes an administration fee and is based on estimated amounts for the
current fiscal year.
(2) Absent fee waivers and reimbursements, the respective dollar amounts for
the 1, 3, 5, and 10-year periods would be $12, $38, $66, and $147 (Acquired
Fund); $10, $30, $52, and $115 (Acquiring Fund); and $10, $30, $52, and
$115 (Pro Forma).
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
Class A and Class B shares of the Acquiring Fund received by Acquired Fund
shareholders in the Reorganization will be subject to the same purchase,
exchange and redemption procedures that currently apply to Class A and Class B
shares of the Acquired Fund. These procedures are discussed in the Retail Class
Prospectus of the Acquired Fund and the Acquiring Fund which accompanies this
Prospectus/Proxy Statement under the headings "Investing in the Funds" and
"Redeeming Shares."
Class C shares of the Acquiring Fund received by Acquired Fund shareholders
in the Reorganization will be subject to the same purchase, exchange and
redemption procedures that currently apply to Class C shares of the Acquired
Fund. These procedures are discussed in the Institutional Class Prospectus of
the Acquired Fund and the Acquiring Fund which accompanies this Prospectus/Proxy
Statement under the heading "Purchases and Redemptions of Shares."
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared daily and paid monthly with respect to both the
Acquired Fund and the Acquiring Fund. Distributions of any net realized
long-term capital gains are made at least once every twelve months with respect
to both Funds. Dividends and distributions for each Fund are automatically
reinvested in additional shares of the Fund unless cash payments are requested
by contacting the Fund.
SHAREHOLDER VOTING RIGHTS
Class A, Class B and Class C shares of both Funds are treated as separate
classes of shares issued by the respective Funds. Class A, Class B and Class C
shares within a Fund vote together as a single class on most issues, such as
election of directors, and as separate classes on issues that affect only a
particular class, such as Rule 12b-1 distribution plans.
RISK FACTORS
Because the investment objectives, policies and restrictions of the
Acquired Fund and the Acquired Fund are similar (see "Information About the
Acquired Fund and the Acquiring Fund" below), the risks associated with
investing in both Funds are similar. Each of the Funds is subject to the risk of
generally adverse equity markets. Investors also should recognize that the
market prices of equity securities generally, and of particular companies'
equity securities, are subject to greater volatility than prices of fixed income
securities.
Because both Funds are actively managed, their performance reflects in part
the ability of the Manager to select securities which are suited to achieving
their investment objectives. Due to their active management, either or both
Funds could underperform other mutual funds with similar investment objectives
or the market generally.
In addition, both Funds may invest up to 25% of their total assets in
securities of foreign issuers which are either listed on a United States
securities exchange or represented by American Depositary Receipts and may
invest in the types of instruments referred to below under "Information About
the Acquired Fund and the Acquiring Fund." For further information concerning
these types of investments and their associated risks, see "Investment
Objectives and Policies" and "Special Investment Methods" in the Retail Class
Prospectus and the Institutional Class Prospectus relating to the Funds which
accompany this Prospectus/Proxy Statement.
INFORMATION ABOUT THE REORGANIZATION
REASONS FOR THE REORGANIZATION
The Board of Directors of FAIF, including all of the "non-interested"
directors, has determined that it is advantageous to combine the Acquired Fund
with the Acquiring Fund. As discussed in detail below under "Information About
the Acquired Fund and the Acquiring Fund," the Funds have similar investment
objectives, policies and restrictions. The Funds also have the same investment
manager and the same distributor, custodian, transfer agent and auditors.
The Board of Directors of FAIF has determined that the Reorganization is
expected to provide certain benefits to the Acquired Fund and the Acquiring Fund
and is in the best interests of each Fund and its respective shareholders. The
Board of Directors has also determined that the interests of the existing
shareholders of each Fund will not be diluted as a result of the Reorganization.
The Board considered, among other things, the following factors in making such
determinations:
(i) the advantages which may be realized by the Acquired Fund and the
Acquiring Fund, consisting of a potentially reduced expense ratio before
waivers, economies of scale resulting from fund growth, and facilitation of
portfolio management. The Board noted in this regard that the Acquiring
Fund, with its much larger asset base and resulting economies of scale, has
a significantly lower expense ratio before fee waivers than does the
smaller Acquired Fund, and it is expected that holders of the Acquired Fund
will benefit from this lower expense ratio;
(ii) the tax-free nature of the proposed Reorganization;
(iii) the terms and conditions of the Plan, including that (a) the
exchange of Acquired Fund shares for Acquiring Fund shares will take place
on a net asset value basis; (b) no sales charge will be incurred by
Acquired Fund shareholders in connection with their acquisition of
Acquiring Fund shares in the Reorganization; and (c) the condition to
closing that the Manager or an affiliate of the Manager pay any unamortized
organizational expenses on the books of the Acquired Fund;
(iv) the agreement of the Manager to bear the costs associated with
the proposed Reorganization;
(v) the fact that the advisory fee, Rule 12b-1 fees and sales charges
would remain constant for Acquired Fund shareholders;
(vi) the Acquiring Fund's agreements that (a) former holders of
Acquired Fund Class B shares who receive Acquiring Fund Class B shares in
the Reorganization will receive credit for the period they held Acquired
Fund Class B shares in applying the six-year step-down of the contingent
deferred sales charge on Acquiring Fund Class B shares and in determining
the date upon which such shares convert to Acquiring Fund Class A shares;
and (b) in applying the 24-month 1% deferred sales charge on purchases of
Class A shares with respect to which the front-end sales charge was waived,
credit will be given for the period a former Acquired Fund shareholder who
is subject to such a deferred sales charge held his or her shares; and
(vii) the fact that in no event will the holders of Acquired Fund
shares become subject to a less advantageous total expense "cap" as a
result of the proposed combination of Funds.
The Board also considered the potential benefits to the Manager which could
result from the proposed Reorganization. The Board recognized that if the
Manager determines to waive advisory fees in the future, to the extent that the
proposed Reorganization results in lower overall expense ratios before fee
waivers, the combination of Funds would have the effect of decreasing the cost
to the Manager of providing such waivers. The Board also noted, however, that
the Manager is not obligated to make any such waivers and that if such waivers
are not made, former shareholders of the Acquired Fund and shareholders of the
Acquiring Fund would benefit directly from any decreases in overall expense
ratios and that, in any event, the proposed Reorganization is expected to
provide other benefits to shareholders. The Board thus concluded that, despite
these potential benefits to the Manager, the factors noted in (i) through (vii)
above render the proposed Reorganization fair to and in the best interests of
shareholders of the Acquired Fund and the Acquiring Fund.
PLAN OF REORGANIZATION
The following summary of the proposed Plan and the Reorganization is
qualified in its entirety by reference to the Plan attached to this
Prospectus/Proxy Statement as Exhibit A. The Plan provides that, as of the
Effective Time, the Acquiring Fund will acquire all of the assets and assume all
liabilities of the Acquired Fund in exchange for Acquiring Fund shares having an
aggregate net asset value equal to the aggregate value of the assets acquired
(less liabilities assumed) from the Acquired Fund. The Acquired Fund and the
Acquiring Fund are separate series of shares within FAIF, a single Maryland
corporation. As a result, for corporate law purposes, the acquisition of assets,
assumption of liabilities and exchange of shares is structured under the Plan as
a reallocation of assets and liabilities from the Acquired Fund to the Acquiring
Fund coupled with the issuance and exchange of Class A, Class B and Class C
Acquiring Fund shares in exchange for Class A, Class B and Class C Acquired Fund
shares, respectively. This reallocation of assets and liabilities and exchange
of shares is accomplished under the Plan by amending the articles of
incorporation of FAIF in the manner set forth in the amendment to FAIF's
articles of incorporation as set forth in Exhibit 1 to the Plan attached hereto
as Exhibit A.
Pursuant to the Plan, each holder of Class A, Class B or Class C shares of
the Acquired Fund will receive, at the Effective Time, Class A, Class B or Class
C shares of the Acquiring Fund, as applicable, with an aggregate net asset value
equal to the aggregate net asset value of the Acquired Fund shares owned by such
shareholder immediately prior to the Effective Time. At the Effective Time, the
Acquiring Fund will issue and distribute, at the direction of the Acquired
Fund's Board of Directors, to the Acquired Fund's shareholders of record,
determined as of the Effective Time, the Acquiring Fund Shares issued in
exchange for the Acquired Fund Shares as described above. Thereafter, no
additional shares representing interests in the Acquired Fund will be issued,
and the Acquired Fund will be deemed to be liquidated.
Under the Plan, the net asset value per share of the Acquired Fund's and
the Acquiring Fund's Class A, Class B and Class C shares will be computed as of
the Effective Time using the valuation procedures set forth in FAIF's amended
and restated articles of incorporation and bylaws and then-current Prospectuses
and Statement of Additional Information and as may be required by the Investment
Company Act. The distribution of Acquiring Fund shares to former Acquired Fund
shareholders described above will be accomplished by the establishment of
accounts on the share records of the Acquiring Fund in the names of Acquired
Fund shareholders, each representing the respective classes and numbers of full
and fractional Acquiring Fund shares due such shareholders.
The Plan provides that no sales charges will be incurred by Acquired Fund
shareholders in connection with the acquisition by them of Acquiring Fund shares
pursuant thereto. The Plan also provides that in determining contingent deferred
sales charges applicable to Class B shares issued by the Acquiring Fund in the
Reorganization and the date upon which such shares convert to Class A shares,
the Acquiring Fund will give credit for the period during which the holders
thereof held the Class B shares of the Acquired Fund in exchange for which such
Acquiring Fund shares were issued. In addition, the Plan provides that if Class
A shares of the Acquiring Fund are distributed in the Reorganization to former
holders of Class A shares of the Acquired Fund with respect to which the
front-end sales charge was waived due to a purchase of $1 million or more, the
Acquiring Fund will give credit for the period during which the holder thereof
held such Acquired Fund shares in determining whether a deferred sales charge is
payable upon the sale of such Class A shares of the Acquiring Fund.
The Acquired Fund contemplates that it will make a distribution,
immediately prior to the Effective Time, of all of its net income and net
realized capital gains, if any, not previously distributed. This distribution
will be taxable to Acquired Fund shareholders subject to taxation.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including, among others: (i) approval of the Plan, which
includes the related amendment of FAIF's articles of incorporation attached to
the Plan, by the shareholders of the Acquired Fund; (ii) the delivery of the
opinion of counsel described below under "-- Federal Income Tax Consequences;"
(iii) the accuracy as of the Effective Time of the representations and
warranties made by the Acquired Fund and the Acquiring Fund in the Plan; and
(iv) the delivery of customary closing certificates. See the Plan attached
hereto as Exhibit A for a complete listing of the conditions to the consummation
of the Reorganization. The Plan may be terminated and the Reorganization
abandoned at any time prior to the Effective Time, before or after approval by
shareholders of the Acquired Fund, by resolution of the Board of Directors of
FAIF, if circumstances should develop that, in the opinion of the Board, make
proceeding with the consummation of the Plan and Reorganization not in the best
interests of either Fund's shareholders.
The Plan provides that the Manager will pay all expenses incurred in
connection with the Reorganization, and neither Fund will be liable for such
expenses. The Plan also provides that the Manager will pay the Acquired Fund an
amount equal to the unamortized organizational expenses, if any, on the books of
the Acquired Fund, and such unamortized organizational expenses shall not be
reflected in the calculation of the net asset values per share of the Acquired
Fund's shares for purposes of the exchange of shares under the Plan.
Approval of the Plan will require the affirmative vote of a majority of the
outstanding shares of each class of the Acquired Fund, voting as separate
classes. Approval of the Plan by Acquired Fund shareholders will be deemed
approval of the amendment to the amended and restated articles of incorporation
of FAIF attached to the Plan. If the Plan is not approved, the Board of
Directors of FAIF will consider other possible courses of action. Acquired Fund
shareholders are not entitled to assert dissenters' rights of appraisal in
connection with the Plan or Reorganization. See "Voting Information -- No
Dissenters' Rights of Appraisal" below.
DESCRIPTION OF ACQUIRING FUND SHARES
The Class A, Class B and Class C shares of the Acquiring Fund issued in the
Reorganization will represent shares of common stock, $.0001 par value, in the
Acquiring Fund, which is an open-end mutual fund and a series of FAIF. FAIF is
an open-end management investment company incorporated under the laws of the
State of Maryland. Each share of the Acquiring Fund issued in the Reorganization
will be fully paid, nonassessable, and transferable. Shares may be issued as
either full or fractional shares. Fractional shares have pro rata the same
rights and privileges as full shares. Shares of the Acquiring Fund have no
preemptive or conversion rights.
Each share of the Acquiring Fund has one vote. On some issues, such as the
election of directors, all shares of all series of FAIF vote together as one
series. The shares do not have cumulative voting rights. Consequently, the
holders of more than 50% of the shares voting for the election of directors are
able to elect all of the directors if they choose to do so. On issues affecting
only a particular series or class within a series, the shares of that series or
class will vote as a separate series or class. Examples of such issues would be
proposals to alter a fundamental investment restriction pertaining to a series
or to approve, disapprove or alter a distribution plan pertaining to a class.
Under the laws of the State of Maryland and FAIF's articles of
incorporation, FAIF is not required to hold shareholder meetings unless they (i)
are required by the Investment Company Act, or (ii) are requested in writing by
the holders of 25% or more of the outstanding shares of FAIF.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the exchange of Acquiring Fund shares for the Acquired
Fund's net assets and the distribution of such shares to the Acquired Fund's
shareholders upon liquidation of the Acquired Fund will be treated as a tax-free
reorganization under the Code and that, for federal income tax purposes, no
income, gain or loss will be recognized by the Acquired Fund's shareholders
(except that the Acquired Fund contemplates that it will make a distribution,
immediately prior to the Effective Time, of all of its net income and net
realized capital gains, if any, not previously distributed, and this
distribution will be taxable to Acquired Fund shareholders subject to taxation).
FAIF has not asked, nor does it plan to ask, the Internal Revenue Service to
rule on the tax consequences of the Reorganization.
As a condition to the closing of the Reorganization, the two Funds will
receive an opinion from Dorsey & Whitney P.L.L.P., counsel to the Funds, based
in part on certain representations to be furnished by each Fund and their
Manager and other service providers, substantially to the effect that the
federal income tax consequences of the Reorganization will be as follows:
(i) the Reorganization will constitute a reorganization within the meaning
of Section 368(a)(1)(C) of the Code, and the Acquiring Fund and the
Acquired Fund each will qualify as a party to the Reorganization under
Section 368(b) of the Code;
(ii) Acquired Fund shareholders will recognize no income, gain or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund shares.
Acquired Fund shareholders subject to taxation will recognize income
upon receipt of any net investment income or net capital gains of the
Acquired Fund which are distributed by the Acquired Fund prior to the
Effective Time;
(iii) the tax basis of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will be equal to the
tax basis of the Acquired Fund shares exchanged therefor;
(iv) the holding period of the Acquiring Fund shares received by each
Acquired Fund shareholder pursuant to the Reorganization will include
the period during which the Acquired Fund shareholder held the
Acquired Fund shares exchanged therefor, provided that the Acquired
Fund shares were held as a capital asset at the Effective Time;
(v) the Acquired Fund will recognize no income, gain or loss by reason of
the Reorganization;
(vi) the Acquiring Fund will recognize no income, gain or loss by reason of
the Reorganization;
(vii) the tax basis of the assets received by the Acquiring Fund pursuant
to the Reorganization will be the same as the basis of those assets in
the hands of the Acquired Fund as of the Effective Time;
(viii) the holding period of the assets received by the Acquiring Fund
pursuant to the Reorganization will include the period during which
such assets were held by the Acquired Fund; and
(ix) the Acquiring Fund will succeed to and take into account the earnings
and profits, or deficit in earnings and profits, of the Acquired Fund
as of the Effective Time.
The foregoing advice is based in part upon certain representations
furnished by FAIF and the Manager, of which two principal ones are: (a) that
assets representing at least 90% of the fair market value of the Acquired Fund's
net assets and at least 70% of the fair market value of the Acquired Fund's
gross assets at the Effective Time are exchanged solely for Acquiring Fund
shares with unrestricted voting rights, and (b) that there is no plan or
intention by the shareholders of the Acquired Fund who own beneficially 5% or
more of the outstanding shares of the Acquired Fund and, to the best knowledge
of FAIF, there is no plan or intention on the part of the remaining Acquired
Fund shareholders to sell, exchange or otherwise dispose of a number of
Acquiring Fund shares to be received pursuant to the Reorganization that would
reduce such shareholders' interest to a number of Acquiring Fund shares having,
in the aggregate, a value as of the Effective Time of less than 50% of the total
value of the Acquired Fund shares outstanding immediately prior to the
consummation of the Reorganization.
Shareholders of the Acquired Fund should consult their tax advisors
regarding the effect, if any, of the proposed Reorganization in light of their
individual circumstances. Since the foregoing discussion only relates to the
federal income tax consequences of the Reorganization, shareholders of the
Acquired Fund should consult their tax advisors as to state and local tax
consequences, if any, of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors of FAIF, including the "non-interested" directors,
recommends that shareholders of the Acquired Fund approve the Plan. Approval of
the Plan will require the affirmative vote of a majority of the outstanding
shares of each class of the Acquired Fund, voting as separate classes. Approval
of the Plan by Acquired Fund shareholders will be deemed approval of the
amendment to the amended and restated articles of incorporation of FAIF attached
to the Plan.
INFORMATION ABOUT THE ACQUIRED FUND AND THE ACQUIRING FUND
Information concerning the Acquiring Fund and the Acquired Fund is
incorporated herein by reference from the current Retail Class Prospectus and
the current Institutional Class Prospectus, each related to both the Acquiring
Fund and the Acquired Fund and dated January 31, 1995, accompanying this
Prospectus/Proxy Statement and forming part of the Registration Statement of
FAIF on Form N-1A which has been filed with the Commission.
The Acquiring Fund, the Acquired Fund and FAIF are subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and in accordance therewith file reports and other information including
proxy materials, reports and charter documents with the Commission. These proxy
materials, reports and other information filed by the Acquiring Fund, the
Acquired Fund and FAIF can be inspected and copies obtained at the Public
Reference Facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the New York Regional Office of the Commission at
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549 at prescribed rates.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The Acquired Fund and the Acquiring Fund are both diversified, open-end
funds with investment objectives which are similar, in that both seek capital
appreciation and income. Specifically:
* The Acquired Fund has a primary objective of maximizing total return
(capital appreciation plus income) within the constraint of
controlling the volatility of the Acquired Fund to a level below that
of the major market indices such as the S&P 500 and the Dow Jones
Industrial Average. In this respect, the Acquired Fund seeks to
maintain a five year historical performance relative to the S&P 500 at
a beta level no greater than .95. A secondary objective of the
Acquired Fund is to provide current income at a level that exceeds
that of the S&P 500.
* The Acquiring Fund has a primary objective of capital appreciation. A
secondary objective of the Acquiring Fund is to provide current
income.
As previously noted, based on the historical performance and current portfolio
composition of the respective Funds, the Funds' investment adviser expects that
the level of net investment income on the respective classes of Acquiring Fund
shares issued in the Reorganization will be somewhat lower than the historical
level of net investment income on the respective classes of Acquired Fund shares
and somewhat lower than the dividend yield of the S&P 500. However, during the
five years ended September 30, 1995, the Acquiring Fund met the Acquired Fund's
investment objective with respect to volatility. See "Summary -- Investment
Objectives, Policies and Restrictions" herein.
In addition, the investment policies of the Acquired Fund and the Acquiring
Fund are substantially identical. Under normal market conditions, both Funds
invest at least 80% of their total assets in equity securities (and at least 65%
in common stocks) diversified among a broad range of industries and among
companies that have a market capitalization of at least $500 million. Both Funds
also are permitted to invest up to 20% of their total assets in the aggregate in
equity securities of issuers with a market capitalization of less than $500
million and in specified kinds of fixed income securities which are the same for
both Funds. Both Funds also may (i) invest up to 25% of their total assets in
securities of foreign issuers which are either listed on a United States stock
exchange or represented by American Depositary Receipts; (ii) enter into
repurchase agreements; (iii) in order to reduce risk, purchase put and call
options on equity securities and on stock indices; (iv) write covered call
options covering up to 25% of the equity securities owned by the Fund; (v)
purchase securities on a when-issued or delayed-delivery basis; (vi) engage in
the lending of portfolio securities; (vii) for defensive purposes during times
of unusual market conditions, without limitation hold cash or invest in cash
items of specified kinds which are the same for both Funds; and (viii) invest
not more than 35% of their total assets in cash and cash items in order to
utilize assets awaiting normal investment.
Moreover, the fundamental and non-fundamental investment restrictions
applicable to the two Funds are substantially similar. The only differences in
this regard are that the Acquired Fund, but not the Acquiring Fund, would be
permitted to make margin payments in connection with foreign currency and other
derivative transactions and to invest in mortgage-backed securities. Inasmuch as
the Acquired Fund has not engaged in such transactions, the Manager does not
believe these differences are significant.
For a complete discussion of the investment objectives, policies and
restrictions of the respective Funds, see the Retail Class Prospectus and the
Institutional Class Prospectus accompanying this Prospectus/Proxy Statement and
the Statement of Additional Information referred to under "Incorporation by
Reference."
CAPITALIZATION
The following table shows the capitalization of the Acquired Fund and of
the Acquiring Fund as of September 30, 1995 and on a pro forma basis as of that
date, giving effect to the proposed Reorganization:
(In thousands, except per share values)
ACQUIRED ACQUIRING
FUND FUND PRO FORMA
CLASS A SHARES
Net assets * $ 13,076 $ 13,076
Net asset value per share * $ 19.57 $ 19.57
Shares outstanding * 668 668
CLASS B SHARES
Net assets * $ 7,051 $ 7,051
Net asset value per share * $ 19.49 $ 19.49
Shares outstanding * 362 362
CLASS C SHARES
Net assets $ 17,125 $312,559 $329,684
Net asset value per share $ 11.91 $ 19.56 $ 19.56
Shares outstanding 1,438 15,976 16,852
* No Class A or Class B shares of the Acquired Fund were outstanding at
September 30, 1995.
VOTING INFORMATION
GENERAL
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors of FAIF to be used at the
Meeting of Acquired Fund shareholders to be held at 10:00 a.m., Eastern time, on
January 22, 1996, at the offices of SEI Corporation, 680 East Swedesford Road,
Wayne, Pennsylvania and at any adjournments thereof. This Prospectus/Proxy
Statement, along with a Notice of Special Meeting and a proxy card, is first
being mailed to shareholders of the Acquired Fund on or about December 18, 1995.
Only shareholders of record as of the close of business on December 18, 1995
(the "Record Date") will be entitled to notice of, and to vote at, the Meeting
or any adjournment thereof. If the enclosed form of proxy is properly executed
and returned on time to be voted at the Meeting, the proxies named therein will
vote the shares represented by the proxy in accordance with the instructions
marked thereon. Unmarked proxies will be voted "for" the proposed Plan and
Reorganization. A proxy may be revoked by giving written notice, in person or by
mail, of revocation before the Meeting to FAIF at its principal executive
offices, 680 East Swedesford Road, Wayne, Pennsylvania 19087, or by properly
executing and submitting a later-dated proxy, or by voting in person at the
Meeting.
If a shareholder executes and returns a proxy but abstains from voting, the
shares held by such shareholder will be deemed present at the Meeting for
purposes of determining a quorum and will be included in determining the total
number of votes cast. If a proxy is received from a broker or nominee indicating
that such person has not received instructions from the beneficial owner or
other person entitled to vote Acquired Fund shares (i.e., a broker "non-vote"),
the shares represented by such proxy will not be considered present at the
Meeting for purposes of determining a quorum and will not be included in
determining the number of votes cast. Brokers and nominees will not have
discretionary authority to vote shares for which instructions are not received
from the beneficial owner.
Approval of the Plan and Reorganization will require the affirmative vote
described above under "Information About the Reorganization -- Recommendation
and Vote Required."
As of August 31, 1995, (i) the Acquired Fund had the following numbers of
shares outstanding and entitled to vote at the Meeting: Class A, 0 shares; Class
B, 0 shares; and Class C, 1,450,381.465 shares; (ii) the Acquiring Fund had the
following numbers of shares outstanding: Class A, 642,133.901 shares; Class B,
310,675.0785 shares; and Class C, 15,356,773.179 shares; and (iii) the directors
and officers of the respective Funds as a group owned less than one percent of
the outstanding shares of either Fund or any class thereof. The following table
sets forth information concerning those persons known by the respective Funds to
own of record or beneficially more than 5% of the outstanding shares of either
Fund or any class thereof (including 25% holders) as of such date:
PERCENTAGE
NUMBER AND CLASS OWNERSHIP
NAME AND ADDRESS OF HOLDER OF SHARES OWNED OF CLASS
ACQUIRED FUND:
Var & Co. 1,450,381 Class C* 100.00%
First Trust National Association
P.O. Box 64010
St. Paul, Minnesota 55164-0010
First Bank System Personal
Retirement Account 939,253 Class C* 64.76%
First Bank Systems, Inc.
601 Second Avenue South
Minneapolis, Minnesota 55402
ACQUIRING FUND:
Mankato State University 34,594.829 Class A*** 5.38%
P.O. Box 8400
MSU 60
Mankato, Minnesota 56002
Var & Co. 11,697,162.017 Class C* 76.17%
First Trust National Association
P.O. Box 64010
St. Paul, Minnesota 55164-0010
First Trust National Association 3,185,537.996 Class C* 20.74%
P.O. Box 64010
St. Paul, Minnesota 55164-0010
* Record ownership only.
** Beneficial ownership only.
*** Record and beneficial ownership.
Proxies are solicited by mail. Additional solicitations may be made by
telephone or personal contact by officers or employees of the Distributor and
its affiliates. The cost of solicitation will be born by the Manager.
In the event that sufficient votes to approve the Plan and Reorganization
are not received by the date set for the Meeting, the persons named as proxies
may propose one or more adjournments of the Meeting for up to 120 days to permit
further solicitation of proxies. In determining whether to adjourn the Meeting,
the following factors may be considered: the percentage of votes actually cast,
the percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any such adjournment will require the
affirmative vote of a majority of the shares present in person or by proxy and
entitled to vote at the Meeting. The persons named as proxies will vote upon
such adjournment after consideration of the best interests of all shareholders.
INTERESTS OF CERTAIN PERSONS
The following receive payments from the Acquired Fund and the Acquiring
Fund for services rendered pursuant to contractual arrangements with each of the
Funds: First Bank National Association, as the Manager of each Fund, receives
payments for its investment advisory and management services; SEI Financial
Services Company, as the Distributor for each Fund, receives payments for
providing distribution services; FBS Investment Services, Inc., a subsidiary of
First Bank National Association, receives payments from the Manager for
providing distribution services for each Fund; SEI Financial Management
Corporation, in its capacity as the Administrator for each Fund, receives
payments for providing shareholder servicing, legal and accounting and other
administrative personnel and services; DST Systems, Inc., in its capacity as
transfer and dividend disbursing agent for each Fund, receives payments for
providing transfer agency and dividend disbursing services; and First Trust
National Association, a subsidiary of First Bank System, Inc., which also
controls First Bank National Association, receives payments for providing
custodial services for each Fund.
NO DISSENTERS' RIGHTS OF APPRAISAL
Under the Maryland General Corporation Law and the Investment Company Act,
Acquired Fund shareholders are not entitled to assert dissenters' rights of
appraisal in connection with the Plan or Reorganization.
FINANCIAL STATEMENTS AND EXPERTS
The audited statement of net assets of Stock Fund as of September 30, 1994,
and the related statement of operations for the year then ended, changes in net
assets for each of the years in the two-year period then ended and the financial
highlights for the periods indicated therein, as included in the Statement of
Additional Information of FAIF dated January 31, 1995, have been incorporated by
reference into this Prospectus/Proxy Statement in reliance on the report of KPMG
Peat Marwick LLP, independent auditors for Stock Fund, given on the authority of
such firm as experts in accounting and auditing. In addition, the unaudited
financial statements for Stock Fund and Limited Volatility Stock Fund for the
six-month period ending March 31, 1995, as included in the Semi-Annual Report of
FAIF for the six-month period ending March 31, 1995, are incorporated herein by
reference.
LEGAL MATTERS
Certain legal matters concerning the issuance of the shares of the
Acquiring Fund to be issued in the Reorganization will be passed by Dorsey &
Whitney P.L.L.P., 220 South Sixth Street, Minneapolis, Minnesota 55402. Dorsey &
Whitney, P.L.L.P. will rely, as to matters of Maryland law, on the opinion of
Ober, Kaler, Grimes & Shriver, A Professional Corporation.
PROSPECTUS /PROXY STATEMENT
DECEMBER 18, 1995
PROPOSED ACQUISITION OF ASSETS OF
LIMITED VOLATILITY STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
BY AND IN EXCHANGE FOR SHARES OF
STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
TABLE OF CONTENTS
PAGE
INCORPORATION BY REFERENCE 3
SUMMARY 4
RISK FACTORS 11
INFORMATION ABOUT THE REORGANIZATION 11
INFORMATION ABOUT THE ACQUIRED FUND AND THE
ACQUIRING FUND 16
VOTING INFORMATION 18
FINANCIAL STATEMENTS AND EXPERTS 20
LEGAL MATTERS 20
EXHIBIT A -- AGREEMENT AND PLAN OF
REORGANIZATION
THE FOLLOWING DOCUMENTS ACCOMPANY THIS PROSPECTUS/PROXY STATMENT:
EQUITY FUNDS RETAIL CLASS PROSPECTUS DATED JANUARY 31, 1995, OF FIRST AMERICAN
INVESTMENT FUNDS, INC.
EQUITY FUNDS INSTITUTIONAL CLASS PROSPECTUS DATED JANUARY 31, 1995.
ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994, OF FIRST AMERICAN
INVESTMENT FUNDS, INC.
EXHIBIT A TO PROSPECTUS/PROXY STATEMENT
AGREEMENT AND PLAN OF REORGANIZATION
LIMITED VOLATILITY STOCK FUND AND STOCK FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 1995, by and between Class D (also known as "Stock Fund") (the
"Acquiring Fund") of First American Investment Funds, Inc., a Maryland
corporation ("FAIF"), and Class R (also known as "Limited Volatility Stock
Fund") (the "Acquired Fund") of FAIF. The shares of the Acquiring Fund and the
Acquired Fund designated in FAIF's amended and restated articles of
incorporation, as supplemented by articles supplementary thereto filed through
the date hereof, are referred to herein by the names set forth in Article V,
Section 3 of FAIF's bylaws, as follows:
Designation in Articles of
Incorporation or Articles Supplementary Name Assigned in Bylaws
Class D Common Shares Stock Fund, Class A
Class D, Series 2 Common Shares Stock Fund, Class B
Class D, Series 3 Common Shares Stock Fund, Class C
Class R Common Shares Limited Volatility Stock Fund, Class A
Class R, Series 2 Common Shares Limited Volatility Stock Fund, Class B
Class R, Series 3 Common Shares Limited Volatility Stock Fund, Class C
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation pursuant to Sections 368(a)(1)(C) of the United States Internal
Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the consolidation of the Acquired Fund with
and into the Acquiring Fund by means of the exchange of shares of common stock,
par value $.0001 per share, of the Acquiring Fund (the "Acquiring Fund Shares"),
having an aggregate net asset value equal to the aggregate net asset value of
the Acquired Fund, for all of the issued and outstanding shares of common stock,
par value $.0001 per share, of the Acquired Fund (the "Acquired Fund Shares"),
all upon the terms and conditions hereinafter set forth in this Agreement. The
exchange of Acquiring Fund Shares for Acquired Fund Shares will be effected
pursuant to an amendment to FAIF's Articles of Incorporation in the form
attached hereto as Exhibit 1 (the "Amendment") to be adopted in accordance with
the Maryland General Corporation Law.
WITNESSETH:
WHEREAS, FAIF is a registered, open-end management investment company that
offers its shares of common stock in multiple series (each of which series
represents a separate and distinct portfolio of assets and liabilities);
WHEREAS, each of the Acquiring Fund and the Acquired Fund series of FAIF
offers Class A shares, Class B shares and Class C shares;
WHEREAS, the Acquired Fund owns securities which generally are assets of
the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Board of Directors of FAIF has determined that the
consolidation of the Acquired Fund with and into the Acquiring Fund by means of
the exchange of Class A, Class B and Class C Acquiring Fund Shares for all of
the issued and outstanding Class A, Class B and Class C Acquired Fund Shares,
respectively, on the basis set forth herein is in the best interests of the
Acquired Fund shareholders and the Acquiring Fund shareholders;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. EXCHANGE OF SHARES; REALLOCATION OF ASSETS AND LIABILITIES
1.1 Subject to the requisite approval by the Acquired Fund shareholders and
to the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund and the
Acquiring Fund agree that at the Effective Time (as defined in Section 3.1), (a)
each issued and outstanding Class A Acquired Fund Share shall be, without
further action, exchanged for that number of Class A Acquiring Fund Shares
calculated in accordance with Article 2 hereof and the Amendment; (b) each
issued and outstanding Class B Acquired Fund Share shall be, without further
action, exchanged for that number of Class B Acquiring Fund Shares calculated in
accordance with Article 2 hereof and the Amendment; and (c) each issued and
outstanding Class C Acquired Fund Share shall be, without further action,
exchanged for that number of Class C Acquiring Fund Shares calculated in
accordance with Article 2 hereof and the Amendment.
1.2 (a) At the Effective Time, the assets and liabilities belonging to the
Acquired Fund and its respective classes shall become, without further action,
assets and liabilities belonging to the Acquiring Fund and its respective
classes, all in accordance with Article IV, Section 1(d)(i) and (ii) of FAIF's
amended and restated articles of incorporation. For purposes of the foregoing,
the terms "assets belonging to" and "liabilities belonging to" have the meanings
assigned to them in said Article IV, Section 1(d)(i) and (ii). Such assets
belonging to the Acquired Fund to become assets belonging to the Acquiring Fund
shall consist of all of Acquired Fund's property, including, but not limited to,
all cash, securities, commodities and futures interests and dividends or
interest receivable which are assets belonging to the Acquired Fund as of the
Effective Time. All of said assets shall be set forth in detail in an unaudited
statement of assets and liabilities of the Acquired Fund as of the Effective
Time (the "Effective Time Statement"). The Effective Time Statement shall, with
respect to the listing of the Acquired Fund's portfolio securities, detail the
adjusted tax basis of such securities by lot, the respective holding periods of
such securities and the current and accumulated earnings and profits of the
Acquired Fund. The Effective Time Statement shall be prepared in accordance with
generally accepted accounting principles (except for footnotes) consistently
applied.
(b) The Acquired Fund has provided the Acquiring Fund with a list of all of
the Acquired Fund's assets as of the date of execution of this Agreement. The
Acquired Fund reserves the right to sell any of these securities prior to the
Effective Time and to acquire additional securities in the ordinary course of
its business.
1.3 Pursuant to Section 1.2(a), at the Effective Time the liabilities,
expenses, costs, charges and reserves (including, but not limited to, expenses
incurred in the ordinary course of the Acquired Fund's operations, such as
accounts payable relating to custodian and transfer agency fees, investment
management and administrative fees, legal and audit fees, and expenses of state
securities registration of the Acquired Fund's shares) as reflected in the
Effective Time Statement shall become liabilities, expenses, costs, charges and
reserves of the Acquiring Fund.
1.4 At the Effective Time and pursuant to the plan of reorganization
adopted herein, the Acquiring Fund will issue and distribute (as provided in
Article 2) to the Acquired Fund or, at the direction of the Acquired Fund's
Board of Directors, to the Acquired Fund's shareholders of record, determined as
of the Effective Time (the "Acquired Fund Shareholders"), the Acquiring Fund
Shares issued in exchange for the Acquired Fund Shares pursuant to Section 1.1
and Article 2. Thereafter, no additional shares representing interests in the
Acquired Fund shall be issued, and the Acquired Fund shall be deemed to be
liquidated. Such distribution shall be accomplished by the issuance of such
Acquiring Fund Shares to open accounts on the share records of the Acquiring
Fund in the names of the Acquired Fund Shareholders representing the numbers and
classes of Acquiring Fund Shares due each such shareholder. All issued and
outstanding shares of the Acquired Fund will simultaneously be cancelled on the
books of the Acquired Fund, although from and after the Effective Time share
certificates representing interests in the Acquired Fund will represent those
numbers and classes of Acquiring Fund Shares as determined in accordance with
Article 2. Unless requested by Acquired Fund Shareholders, the Acquiring Fund
will not issue certificates representing the Acquiring Fund Shares in connection
with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's Prospectuses and Statement of Additional
Information (in effect as of the Effective Time), except that no sales charges
will be incurred by the Acquired Fund Shareholders in connection with the
acquisition by the Acquired Fund Shareholders of Acquiring Fund Shares pursuant
to this Agreement.
1.6 The Acquiring Fund agrees that in determining contingent deferred sales
charges applicable to Class B shares issued by it in the Reorganization and the
date upon which such shares convert to Class A shares, it shall give credit for
the period during which the holders thereof held the Class B shares of the
Acquired Fund in exchange for which such Acquiring Fund shares were issued. In
the event that Class A shares of the Acquiring Fund are distributed in the
Reorganization to former holders of Class A shares of the Acquired Fund with
respect to which the front-end sales charge was waived due to a purchase of $1
million or more, the Acquiring Fund agrees that in determining whether a
deferred sales charge is payable upon the sale of such Class A shares of the
Acquiring Fund it shall give credit for the period during which the holder
thereof held such Acquired Fund shares.
1.7 Any reporting responsibility of the Acquired Fund, including, but not
limited to, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commissions, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
2. EXCHANGE RATIOS; VALUATION; ISSUANCE OF ACQUIRING FUND SHARES
2.1 The net asset value per share of the Acquired Fund's and the Acquiring
Fund's Class A shares, Class B shares and Class C shares shall be computed as of
the Effective Time using the valuation procedures set forth in FAIF's amended
and restated articles of incorporation and bylaws and then-current Prospectuses
and Statement of Additional Information and as may be required by the Investment
Company Act of 1940, as amended (the "1940 Act").
2.2(a) The total number of the Acquiring Fund's Class A shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's Class
A shares shall be determined as of the Effective Time by multiplying the number
of the Acquired Fund's Class A shares outstanding immediately prior to the
Effective Time times a fraction, the numerator of which is the net asset value
per share of the Acquired Fund's Class A shares immediately prior to the
Effective Time, and the denominator of which is the net asset value per share of
the Acquiring Fund's Class A shares immediately prior to the Effective Time,
each as determined pursuant to Section 2.1.
(b) The total number of the Acquiring Fund's Class B shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's Class
B shares shall be determined as of the Effective Time by multiplying the number
of the Acquired Fund's Class B shares outstanding immediately prior to the
Effective Time times a fraction, the numerator of which is the net asset value
per share of the Acquired Fund's Class B shares immediately prior to the
Effective Time, and the denominator of which is the net asset value per share of
the Acquiring Fund's Class B shares immediately prior to the Effective Time,
each as determined pursuant to Section 2.1.
(c) The total number of the Acquiring Fund's Class C shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's Class
C shares shall be determined as of the Effective Time by multiplying the number
of the Acquired Fund's Class C shares outstanding immediately prior to the
Effective Time times a fraction, the numerator of which is the net asset value
per share of the Acquired Fund's Class C shares immediately prior to the
Effective Time, and the denominator of which is the net asset value per share of
the Acquiring Fund's Class C shares immediately prior to the Effective Time,
each as determined pursuant to Section 2.1.
2.3 At the Effective Time, the Acquiring Fund shall issue and distribute to
the Acquired Fund Shareholders of the respective classes pro rata within such
classes (based upon the ratio that the number of Acquired Fund shares of the
respective classes owned by each Acquired Fund Shareholder immediately prior to
the Effective Time bears to the total number of issued and outstanding Acquired
Fund shares of the respective classes immediately prior to the Effective Time)
the full and fractional Acquiring Fund Shares of the respective classes to be
issued by the Acquiring Fund pursuant to Section 2.2. Accordingly, each Class A
Acquired Fund Shareholder shall receive, at the Effective Time, Class A
Acquiring Fund Shares with an aggregate net asset value equal to the aggregate
net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund
Shareholder immediately prior to the Effective Time; each Class B Acquired Fund
Shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares
with an aggregate net asset value equal to the aggregate net asset value of the
Class B Acquired Fund Shares owned by such Acquired Fund Shareholder immediately
prior to the Effective Time; and each Class C Acquired Fund Shareholder shall
receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate
net asset value equal to the aggregate net asset value of the Class C Acquired
Fund Shares owned by such Acquired Fund Shareholder immediately prior to the
Effective Time.
3. EFFECTIVE TIME OF CLOSING
3.1 The closing of the transactions contemplated by this Agreement (the
"Closing") shall occur as of the close of normal trading on the New York Stock
Exchange (the "Exchange") (currently, 4:00 p.m. Eastern time) on the first day
upon which the conditions to closing shall have been satisfied (but not prior to
January 31, 1996), or at such time on such later date as provided herein or as
the parties otherwise may agree in writing (such time and date being referred to
herein as the "Effective Time"). All acts taking place at the Closing shall be
deemed to take place simultaneously as of the Effective Time unless otherwise
agreed to by the parties. The Closing shall be held at the offices of Dorsey &
Whitney P.L.L.P., 220 South Sixth Street, Minneapolis, Minnesota 55402, or at
such other place as the parties may agree.
3.2 The custodian for the Acquiring Fund (the "Custodian") shall deliver at
the Closing a certificate of an authorized officer stating that it holds the
Acquired Fund's portfolio securities, cash, and any other assets being allocated
to the Acquiring Fund pursuant to this Agreement.
3.3 In the event that the Effective Time occurs on a day on which (a) the
Exchange or another primary trading market for portfolio securities of the
Acquiring Fund or the Acquired Fund shall be closed to trading or trading
thereon shall be restricted, or (b) trading or the reporting of trading on the
Exchange or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Effective Time shall be postponed until the close of normal trading on the
Exchange on the first business day when trading shall have been fully resumed
and reporting shall have been restored.
3.4 The Acquired Fund shall deliver at the Closing its certificate stating
that the records maintained by its transfer agent (which shall be made available
to the Acquiring Fund) contain the names and addresses of the Acquired Fund
Shareholders and the number of outstanding Acquired Fund shares owned by each
such shareholder as of the Effective Time. The Acquiring Fund shall certify at
the Closing that the Acquiring Fund Shares required to be issued by it pursuant
to this Agreement have been issued and delivered as reuired herein. At the
Closing, each party shall deliver to the other such bills of sale, liability
assumption agreements, checks, assignments, share certificates, if any, receipts
or other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 The Acquired Fund represents, warrants and covenants to the Acquiring
Fund as follows:
(a) FAIF is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland;
(b) FAIF is a registered investment company classified as a management
company of the open-end type, and its registration with the Commission as an
investment company under the 1940 Act, and of each series of shares offered by
FAIF under the Securities Act of 1933, as amended (the "1933 Act"), is in full
force and effect;
(c) Shares of the Acquired Fund are registered in all jurisdictions in
which they are required to be registered under applicable state securities laws
and any other applicable laws, and said registrations, including any periodic
reports or supplemental filings, are complete and current, and all fees required
to be paid have been paid, and the Acquired Fund is in good standing, is not
subject to any stop orders, and is fully qualified to sell its shares in any
state in which its shares have been registered;
(d) The Acquired Fund is not in violation, and the execution, delivery and
performance of this Agreement will not result in a violation, of FAIF's amended
and restated articles of incorporation or bylaws or of any material agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquired Fund is a party or by which it is bound;
(e) No material litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or, to the
Acquired Fund's knowledge, threatened against the Acquired Fund or any of its
properties or assets. The Acquired Fund is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions herein contemplated;
(f) The unaudited statement of assets and liabilities of the Acquired Fund
as at March 31, 1995 is in accordance with generally accepted accounting
principles consistently applied, and such statement (a copy of which has been
furnished to the Acquiring Fund) presents fairly, in all material respects, the
financial position of the Acquired Fund as at such date, and there are no known
material contingent liabilities of the Acquired Fund as at such date not
disclosed therein;
(g) Since March 31, 1995, there has not been any material adverse change in
the Acquired Fund's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, except as otherwise
disclosed to the Acquiring Fund. For the purposes of this paragraph (g), a
decline in net asset value per share of the Acquired Fund, the discharge or
incurrence of Acquired Fund liabilities in the ordinary course of business, or
the redemption of Acquired Fund shares by Acquired Fund Shareholders shall not
constitute such a material adverse change;
(h) All material federal and other tax returns and reports of the Acquired
Fund required by law to have been filed prior to the Effective Time shall have
been filed and shall be correct, and all federal and other taxes shown as due or
required to be shown as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and, to the best of the
Acquired Fund's knowledge, no such return is currently or shall be under audit
and no assessment shall have been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company, and the Acquired Fund intends to meet the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company for its final, partial taxable year;
(j) All issued and outstanding shares of the Acquired Fund are, and at the
Effective Time will be, duly and validly issued and outstanding, fully paid and
non-assessable. All of the issued and outstanding shares of the Acquired Fund
will, at the Effective Time, be held by the persons and in the amounts set forth
in the records of the Acquired Fund, as provided in Section 3.4. The Acquired
Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares, and there is not
outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Effective Time, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be allocated to the Acquiring Fund
pursuant to Section 1.2, and from and after the Effective Time the Acquiring
Fund will have good and marketable title thereto, subject to no restrictions on
the transfer thereof, including such restrictions as might arise under the 1933
Act other than as disclosed to the Acquiring Fund in the Effective Time
Statement;
(l) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Effective Time by all necessary action on the
part of FAIF's Board of Directors, and, subject to the approval of the Acquired
Fund Shareholders, this Agreement will constitute a valid and binding obligation
of the Acquired Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws relating to or affecting creditors' rights and to the
application of equitable principles in any proceeding, whether at law or in
equity;
(m) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects;
(n) All information pertaining to the Acquired Fund and its agents and
affiliates and included in the Registration Statement referred to in Section 5.5
(or supplied by the Acquired Fund, its agents or affiliates for inclusion in
said Registration Statement), on the effective date of said Registration
Statement and up to and including the Effective Time, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, not materially misleading
(other than as may timely be remedied by further appropriate disclosure);
(o) Since March 31, 1995, there have been no material changes by the
Acquired Fund in accounting methods, principles or practices, including those
required by generally accepted accounting principles, except as disclosed in
writing to the Acquiring Fund; and
(p) The Effective Time Statement will be prepared in accordance with
generally accepted accounting principles (except for footnotes) consistently
applied and will present accurately the assets and liabilities of the Acquired
Fund as of the Effective Time, and the values of the Acquired Fund's assets and
liabilities to be set forth in the Effective Time Statement will be computed as
of the Effective Time using the valuation procedures set forth in the Acquired
Fund's amended and restated articles of incorporation and bylaws and
then-current Prospectuses and Statement of Additional Information and as may be
required by the 1940 Act.
4.2 The Acquiring Fund represents, warrants and covenants to the Acquired
Fund as follows:
(a) FAIF is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland;
(b) FAIF is a registered investment company classified as a management
company of the open-end type, and its registration with the Commission as an
investment company under the 1940 Act, and of each series of shares offered by
FAIF under the 1933 Act, is in full force and effect;
(c) At or before the Effective Time, shares of the Acquiring Fund
(including, but not limited to, the Acquiring Fund Shares) will be registered in
all jurisdictions in which they will be required to be registered under
applicable state securities laws and any other applicable laws (including, but
not limited to, all jurisdictions necessary to effect the Reorganization), and
said registrations, including any periodic reports or supplemental filings, will
be complete and current, and all fees required to be paid will have been paid,
and the Acquiring Fund will be in good standing, and will not be subject to any
stop orders, and will be fully qualified to sell its shares in any state in
which its shares will have been registered;
(d) The Prospectuses and Statement of Additional Information of the
Acquiring Fund, as of the date hereof and up to and including the Effective
Time, conform and will conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not and will not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) The Acquiring Fund is not in violation, and the execution, delivery and
performance of this Agreement will not result in a violation, of FAIF's amended
and restated articles of incorporation or bylaws or of any material agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquiring Fund is a party or by which it is bound;
(f) No material litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or, to the
Acquiring Fund's knowledge, threatened against the Acquiring Fund or any of its
properties or assets. The Acquiring Fund is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions herein contemplated;
(g) The statement of assets and liabilities of the Acquiring Fund as at
September 30, 1994 has been audited by KPMG Peat Marwick LLP, independent
accountants, and is in accordance with generally accepted accounting principles
consistently applied, and such statement (a copy of which has been furnished to
the Acquired Fund) presents fairly, in all material respects, the financial
position of the Acquiring Fund as at such date, and there are no known material
contingent liabilities of the Acquiring Fund as at such date not disclosed
therein;
(h) Since September 30, 1994, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, except
as otherwise disclosed to the Acquired Fund. For the purposes of this paragraph
(h), a decline in net asset value per share of the Acquiring Fund, the discharge
or incurrence of Acquiring Fund liabilities in the ordinary course of business,
or the redemption of Acquiring Fund Shares by Acquiring Fund shareholders shall
not constitute a material adverse change;
(i) All material federal and other tax returns and reports of the Acquiring
Fund required by law to have been filed prior to the Effective Time shall have
been filed and shall be correct, and all federal and other taxes shown as due or
required to be shown as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and to the best of the
Acquiring Fund's knowledge no such return is currently or shall be under audit
and no assessment shall have been asserted with respect to such returns;
(j) For each taxable year of its operation, the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company, and the Acquiring Fund intends to meet the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company in the current and future years;
(k) All issued and outstanding shares of the Acquiring Fund are, and at
Effective Time will be, duly and validly issued and outstanding, fully paid and
non-assessable;
(l) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms
of this Agreement, at the Effective Time will have been duly authorized and,
when so issued and delivered, will be duly and validly issued Acquiring Fund
Shares and will be fully paid and non-assessable;
(m) The Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any of the Acquiring Fund Shares, and
there is not outstanding any security convertible into any of the Acquiring Fund
Shares (other than Class B shares which automatically convert to Class A shares
after a specified period);
(n) At the Effective Time, the Acquiring Fund will have good and marketable
title to the Acquiring Fund's assets;
(o) Since September 30, 1994, there have been no material changes by the
Acquiring Fund in accounting methods, principles or practices, including those
required by generally accepted accounting principles, except as disclosed in
writing to the Acquired Fund;
(p) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Effective Time by all necessary action on the
part of the Board of Directors of FAIF, as issuer of the Acquiring Fund Shares,
and this Agreement will constitute a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws relating to or affecting creditors' rights and to the
application of equitable principles in any proceeding, whether at law or in
equity. Consummation of the transactions contemplated by this Agreement does not
require the approval of the Acquiring Fund's shareholders;
(q) The information to be furnished by the Acquiring Fund for use in
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects;
(r) Following the Reorganization, the Acquiring Fund shall determine its
net asset value per share in accordance with the valuation procedures set forth
in the Acquiring Fund's amended and restated articles of incorporation, bylaws
and Prospectuses and Statement of Additional Information (as the same may be
amended from time to time) and as may be required by the 1940 Act; and
(s) The Registration Statement referred to in Section 5.5, on its effective
date and up to and including the Effective Time, will (i) conform in all
material respects to the applicable requirements of the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act and the
rules and regulations of the Commission thereunder, and (ii) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading
(other than as may timely be remedied by further appropriate disclosure);
provided, however, that the representations and warranties in clause (ii) of
this paragraph shall not apply to statements in (or omissions from) the
Registration Statement concerning the Acquired Fund.
5. FURTHER COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Each of the Acquired Fund and the Acquiring Fund will operate its
business in the ordinary course between the date hereof and the Effective Time,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any other
distributions that may be advisable (which may include distributions prior to
the Effective Time of net income and/or net realized capital gains not
previously distributed).
5.2 The Acquired Fund will call a meeting of its shareholders to consider
and act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund shares.
5.4 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund will each take, or cause to be taken, all actions, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.5 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary with respect to the Acquired Fund and its agents and
affiliates for the preparation of the Registration Statement on Form N-14 of the
Acquiring Fund (the "Registration Statement"), in compliance with the 1933 Act,
the 1934 Act and the 1940 Act.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to conduct
its operations after the Effective Time.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder at or
before the Effective Time, and, in addition thereto, the following further
conditions (any of which may be waived by the Acquired Fund, in its sole and
absolute discretion):
6.1 All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct as of the date hereof and, except as
they may be affected by the transactions contemplated by this Agreement, as of
the Effective Time with the same force and effect as if made at such time; and
6.2 The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its President or a Vice President, in a form
reasonably satisfactory to the Acquired Fund and dated as of the date of the
Closing, to the effect that the representations and warranties of the Acquiring
Fund made in this Agreement are true and correct at the Effective Time, except
as they may be affected by the transactions contemplated by this Agreement and
as to such other matters as the Acquired Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the Acquired
Fund of all of the obligations to be performed by it hereunder at or before the
Effective Time and, in addition thereto, the following conditions (any of which
may be waived by the Acquiring Fund, in its sole and absolute discretion):
7.1 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct as of the date hereof and, except as
they may be affected by the transactions contemplated by this Agreement, as of
the Effective Time with the same force and effect as if made at such time;
7.2 The Acquiring Fund shall have received, and certified as to its receipt
of, the Effective Time Statement;
7.3 The Acquired Fund shall have delivered to the Acquiring Fund a
certificate executed in its name by its President or a Vice President, in form
and substance satisfactory to the Acquiring Fund and dated as of the date of the
Closing, to the effect that the representations and warranties of the Acquired
Fund made in this Agreement are true and correct at and as of the Effective
Time, except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Acquiring Fund shall reasonably
request;
7.4 At or prior to the Effective Time, the Acquired Fund's investment
adviser, or an affiliate thereof, shall have paid or agreed to pay the Acquired
Fund an amount equal to the unamortized organizational expenses, if any, on the
books of the Acquired Fund, and such unamortized organizational expenses shall
not be reflected in the Effective Time Statement; and
7.5 At or prior to the Effective Time, the Acquired Fund's investment
adviser, or an affiliate thereof, shall have reimbursed or agreed to reimburse
the Acquired Fund by the amount, if any, that the expenses incurred by the
Acquired Fund (or accrued up to the Effective Time) exceed any applicable
contractual or state-imposed expense limitations.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
The following shall constitute further conditions precedent to the
consummation of the Reorganization:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of its amended and restated
articles of incorporation and bylaws and applicable law, and certified copies of
the resolutions evidencing such approval shall have been delivered to the
Acquiring Fund. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this
Section 8.1;
8.2 FAIF shall have obtained such exemptive relief from the provisions of
Sections 17 of the 1940 Act as may, in the view of its counsel, be required in
order to consummate the transactions contemplated hereby;
8.3 The Acquiring Fund's investment adviser shall have paid or agreed to
pay the costs incurred by FAIF in connection with the Reorganization, including
the fees and expenses associated with the preparation and filing of the
application for exemptive relief referred to in Section 8.2 above and the
Registration Statement referred to in Section 5.5 above, and the expenses of
printing and mailing the prospectus/proxy statement, soliciting proxies and
holding the shareholders meeting required to approve the transactions
contemplated by this Agreement;
8.4 As of the Effective Time, no action, suit or other proceeding shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;
8.5 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions;
8.6 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act;
8.7 The parties shall have received the opinion of Dorsey & Whitney
P.L.L.P. addressed to the Acquired Fund and the Acquiring Fund, dated as of the
date of the Closing, and based in part on certain representations to be
furnished by the Acquired Fund, the Acquiring Fund, and their investment adviser
and other service providers, substantially to the effect that:
(i) the Reorganization will constitute a reorganization within the meaning
of Section 368(a)(1)(C) of the Code, and the Acquiring Fund and the
Acquired Fund each will qualify as a party to the Reorganization under
Section 368(b) of the Code;
(ii) the Acquired Fund Shareholders will recognize no income, gain or loss
upon receipt, pursuant to the Reorganization, of the Acquiring Fund
Shares. Acquired Fund Shareholders subject to taxation will recognize
income upon receipt of any net investment income or net capital gains
of the Acquired Fund which are distributed by the Acquired Fund prior
to the Effective Time;
(iii) the tax basis of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will be equal to the
tax basis of the Acquired Fund Shares exchanged therefor;
(iv) the holding period of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will include
the period during which the Acquired Fund Shareholder held the
Acquired Fund Shares exchanged therefor, provided that the Acquired
Fund shares were held as a capital asset at the Effective Time;
(v) the Acquired Fund will recognize no income, gain or loss by reason of
the Reorganization;
(vi) the Acquiring Fund will recognize no income, gain or loss by reason of
the Reorganization;
(vii) the tax basis of the assets received by the Acquiring Fund pursuant
to the Reorganization will be the same as the basis of those assets in
the hands of the Acquired Fund as of the Effective Time;
(viii) the holding period of the assets received by the Acquiring Fund
pursuant to the Reorganization will include the period during which
such assets were held by the Acquired Fund; and
(ix) the Acquiring Fund will succeed to and take into account the earnings
and profits, or deficit in earnings and profits, of the Acquired Fund
as of the Effective Time; and
8.8 The Amendment shall have been filed in accordance with the applicable
provisions of Maryland law.
9. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
9.1 The Acquiring Fund and the Acquired Fund agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
9.2 The representations and warranties contained in this Agreement or in
any document delivered pursuant hereto or in connection herewith shall survive
the consummation of the transactions contemplated hereunder.
10. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by either party by resolution of FAIF's Board of Directors at any
time prior to the Effective Time, if circumstances should develop that, in the
good faith opinion of such Board, make proceeding with the Agreement not in the
best interest of the shareholders of the Acquired Fund or the Acquiring Fund.
11. AMENDMENTS
This agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Acquired Fund and the Acquiring Fund; provided, however, that following the
meeting of the Acquired Fund Shareholders called by the Acquired Fund pursuant
to Section 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Acquired Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
12. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered or mailed by registered mail, postage prepaid, addressed to the
Acquiring Fund or the Acquired Fund, 680 East Swedesford Road, Wayne,
Pennsylvania 19087, Attention: President (with a copy to Dorsey & Whitney
P.L.L.P., 220 South Sixth Street, Minneapolis, Minnesota 55402, Attention:
Michael J. Radmer).
13. HEADINGS; COUNTERPARTS; ASSIGNMENT; MISCELLANEOUS
13.1 The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
13.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the prior written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
13.4 The validity, interpretation and effect of this Agreement shall be
governed exclusively by the laws of the State of Minnesota, without giving
effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or a Vice President.
FIRST AMERICAN INVESTMENT FUNDS, INC.
ON BEHALF OF ITS
LIMITED VOLATILITY STOCK FUND
By
Kathryn L. Stanton, Vice President
FIRST AMERICAN INVESTMENT FUNDS, INC.
ON BEHALF OF ITS
STOCK FUND
By
Kathryn L. Stanton, Vice President
EXHIBIT 1 TO AGREEMENT AND PLAN OF REORGANIZATION
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
The undersigned officer of First American Investment Funds, Inc. (the
"Corporation"), a Maryland corporation, hereby certifies that the following
amendments to the Corporation's Amended and Restated Articles of Incorporation
have been advised by the Corporation's Board of Directors and approved by the
Corporation's stockholders in the manner required by the Maryland General
Corporation Law:
WHEREAS, the Corporation is registered as an open end management investment
company (i.e., a mutual fund) under the Investment Company Act of 1940 and
offers its shares to the public in several classes, each of which
represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interests of the holders of the
Class R shares of the Corporation (also known as "Limited Volatility Stock
Fund") that the assets belonging to such class be sold to a separate
portfolio of the Corporation which is known as "Stock Fund" and which is
represented by the Corporation's Class D shares, in exchange for shares of
Stock Fund which are to be delivered to former Limited Volatility Stock
Fund holders; and
WHEREAS, Limited Volatility Stock Fund and Stock Fund have entered into an
Agreement and Plan of Reorganization providing for the foregoing
transactions; and
WHEREAS, the Agreement and Plan of Reorganization requires that, in order
to bind all holders of shares of Limited Volatility Stock Fund to the
foregoing transactions, and in particular to bind such holders to the
exchange of their Limited Volatility Stock Fund shares for Stock Fund
shares, it is necessary to adopt an amendment to the Corporation's Amended
and Restated Articles of Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated
Articles of Incorporation be, and the same hereby are, amended to add the
following Article IV(A) immediately following Article IV thereof:
Article IV(A). (a) For purposes of this Article IV(A), the following
terms shall have the following meanings:
"Corporation" means this corporation.
"Acquired Fund" means the Corporation's Limited Volatility Stock Fund,
which is represented by the Corporation's Class R shares.
"Class A Acquired Fund Shares" means the Corporation's Class R Common
Shares.
"Class B Acquired Fund Shares" means the Corporation's Class R, Series
2 Common Shares.
"Class C Acquired Fund Shares" means the Corporation's Class R, Series
3 Common Shares.
"Acquiring Fund" means the Corporation's Stock Fund, which is
represented by the Corporation's Class D shares.
"Class A Acquiring Fund Shares" means the Corporation's Class D Common
Shares.
"Class B Acquiring Fund Shares" means the Corporation's Class D,
Series 2 Common Shares.
"Class C Acquiring Fund Shares" means the Corporation's Class D,
Series 3 Common Shares.
"Effective Time" means 4:00 p.m. Eastern time on the date upon which
these Articles of Amendment are filed with the Maryland State
Department of Assessments and Taxation.
(b) At the Effective Time, the assets belonging to the Acquired Fund,
the liabilities belonging to the Acquired Fund, and the General Assets and
General Liabilities allocated to the Acquired Fund, shall become, without
further action, assets belonging to the Acquiring Fund, liabilities
belonging to the Acquiring Fund, and General Assets and General Liabilities
allocated to the Acquiring Fund. For purposes of the foregoing, the terms
"assets belonging to," "liabilities belonging to," "General Assets" and
"General Liabilities" have the meanings assigned to them in Article IV,
Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles
of Incorporation.
(c) At the Effective Time, each issued and outstanding Acquired Fund
share shall be, without further action, exchanged for those numbers and
classes of Acquiring Fund shares calculated in accordance with paragraph
(d) below.
(d) The numbers of Class A, Class B and Class C Acquiring Fund Shares
to be issued in exchange for the Class A, Class B and Class C Acquired Fund
Shares shall be determined as follows:
(i) The net asset value per share of the Acquired Fund's and the
Acquiring Fund's Class A Shares, Class B Shares and Class C Shares
shall be computed as of the Effective Time using the valuation
procedures set forth in the Corporation's articles of incorporation
and bylaws and then-current Prospectuses and Statement of Additional
Information and as may be required by the Investment Company Act of
1940, as amended (the "1940 Act").
(ii) The total number of Class A Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the Class
A Acquired Fund Shares shall be determined as of the Effective Time by
multiplying the number of Class A Acquired Fund Shares outstanding
immediately prior to the Effective Time times a fraction, the
numerator of which is the net asset value per share of Class A
Acquired Fund Shares immediately prior to the Effective Time, and the
denominator of which is the net asset value per share of the Class A
Acquiring Fund Shares immediately prior to the Effective Time, each as
determined pursuant to (i) above.
(iii) The total number of Class B Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the Class
B Acquired Fund Shares shall be determined as of the Effective Time by
multiplying the number of Class B Acquired Fund Shares outstanding
immediately prior to the Effective Time times a fraction, the
numerator of which is the net asset value per share of Class B
Acquired Fund Shares immediately prior to the Effective Time, and the
denominator of which is the net asset value per share of the Class B
Acquiring Fund Shares immediately prior to the Effective Time, each as
determined pursuant to (i) above.
(iv) The total number of Class C Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the Class
C Acquired Fund Shares shall be determined as of the Effective Time by
multiplying the number of Class C Acquired Fund Shares outstanding
immediately prior to the Effective Time times a fraction, the
numerator of which is the net asset value per share of Class C
Acquired Fund Shares immediately prior to the Effective Time, and the
denominator of which is the net asset value per share of the Class C
Acquiring Fund Shares immediately prior to the Effective Time, each as
determined pursuant to (i) above.
(v) At the Effective Time, the Acquired Fund shall issue and
distribute to the Acquired Fund shareholders of the respective classes
pro rata within such classes (based upon the ratio that the number of
Acquired Fund shares of the respective classes owned by each Acquired
Fund shareholder immediately prior to the Effective Time bears to the
total number of issued and outstanding Acquired Fund shares of the
respective classes immediately prior to the Effective Time) the full
and fractional Acquiring Fund shares of the respective classes issued
by the Acquiring Fund pursuant to (ii) through (iv) above.
Accordingly, each Class A Acquired Fund shareholder shall receive, at
the Effective Time, Class A Acquiring Fund Shares with an aggregate
net asset value equal to the aggregate net asset value of the Class A
Acquired Fund Shares owned by such Acquired Fund shareholder
immediately prior to the Effective Time; each Class B Acquired Fund
shareholder shall receive, at the Effective Time, Class B Acquiring
Fund Shares with an aggregate net asset value equal to the aggregate
net asset value of the Class B Acquired Fund Shares owned by such
Acquired Fund shareholder immediately prior to the Effective Time; and
each Class C Acquired Fund shareholder shall receive, at the Effective
Time, Class C Acquiring Fund Shares with an aggregate net asset value
equal to the aggregate net asset value of the Class C Acquired Fund
Shares owned by such Acquired Fund shareholder immediately prior to
the Effective Time.
(e) The distribution of Acquiring Fund shares to Acquired Fund
shareholders provided for in paragraphs (c) and (d) above shall be
accomplished by the issuance of such Acquiring Fund shares to open accounts
on the share records of the Acquiring Fund in the names of the Acquired
Fund shareholders representing the numbers and classes of Acquiring Fund
shares due each such shareholder pursuant to the foregoing provisions. All
issued and outstanding shares of the Acquired Fund shall simultaneously be
cancelled on the books of the Acquired Fund and retired. From and after the
Effective Time, share certificates formerly representing Acquired Fund
shares shall represent the numbers and classes of Acquiring Fund shares
determined in accordance with the foregoing provisions.
(f) From and after the Effective Time, the Acquired Fund shares
cancelled and retired pursuant to paragraph (e) above shall have the status
of authorized and unissued Class R common shares of the Corporation,
without designation as to series.
The undersigned officer of the Corporation hereby acknowledges, in the name
and on behalf of the Corporation, the foregoing Articles of Amendment to be the
corporate act of the Corporation and further certifies that, to the best of his
or her knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
IN WITNESS WHEREOF, the Corporation has caused these Article of Amendment
to be signed in its name and on its behalf by its President or a Vice President
and witnessed by its Secretary or an Assistant Secretary on , 1996.
FIRST AMERICAN INVESTMENT FUNDS, INC
By
Its
WITNESS:
Secretary
FIRST AMERICAN INVESTMENT FUNDS, INC.
EQUITY FUNDS
RETAIL CLASS
STOCK FUND DIVERSIFIED GROWTH FUND
EQUITY INDEX FUND EMERGING GROWTH FUND
BALANCED FUND REGIONAL EQUITY FUND
LIMITED VOLATILITY STOCK FUND SPECIAL EQUITY FUND
ASSET ALLOCATION FUND TECHNOLOGY FUND
EQUITY INCOME FUND INTERNATIONAL FUND
PROSPECTUS
JANUARY 31, 1995
[LOGO] FIRST AMERICAN FUNDS
The power of disciplined investing
TABLE OF CONTENTS
PAGE
SUMMARY 4
FEES AND EXPENSES 8
Class A Share Fees and Expenses 8
Class B Share Fees and Expenses 10
Information Concerning Fees and
Expenses 12
FINANCIAL HIGHLIGHTS 14
THE FUNDS 18
INVESTMENT OBJECTIVES AND POLICIES 18
Stock Fund 19
Equity Index Fund 20
Balanced Fund 21
Limited Volatility Stock Fund 23
Asset Allocation Fund 24
Equity Income Fund 25
Diversified Growth Fund 27
Emerging Growth Fund 28
Regional Equity Fund 29
Special Equity Fund 30
Technology Fund 31
International Fund 32
Risks to Consider 34
MANAGEMENT 34
Investment Adviser 35
Sub-Adviser to International Fund 36
Portfolio Managers 36
Custodian 39
Administrator 40
Transfer Agent 40
DISTRIBUTOR 40
INVESTING IN THE FUNDS 42
Share Purchases 42
Minimum Investment Required 43
Alternative Sales Charge Options 43
Systematic Investment Program 48
Exchanging Securities for Fund
Shares 48
Certificates and Confirmations 48
Dividends and Distributions 48
Exchange Privilege 49
REDEEMING SHARES 50
By Telephone 50
By Mail 51
By Systematic Withdrawal Program 52
Redemption Before Purchase
Instruments Clear 52
Accounts with Low Balances 52
DETERMINING THE PRICE OF SHARES 53
Determining Net Asset Value 53
Foreign Securities 54
FEDERAL INCOME TAXES 55
FUND SHARES 56
CALCULATION OF PERFORMANCE DATA 56
SPECIAL INVESTMENT METHODS 58
Cash Items 58
Repurchase Agreements 58
When-Issued and Delayed-Delivery
Transactions 59
Lending of Portfolio Securities 59
Options Transactions 60
Futures and Options on Futures 61
Fixed Income Securities 62
Foreign Securities 63
Foreign Currency Transactions 64
Mortgage-Backed Securities 65
Asset-Backed Securities 67
Bank Instruments 67
Portfolio Transactions 67
Portfolio Turnover 68
Investment Restrictions 68
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 East Swedesford Road, Wayne, Pennsylvania 19087
RETAIL CLASSES PROSPECTUS
The shares described in this Prospectus represent interests in First American
Investment Funds, Inc., which consists of mutual funds with several different
investment portfolios and objectives. This Prospectus relates to the Class A
and Class B Shares of the following funds (the "Funds"):
* STOCK FUND * DIVERSIFIED GROWTH FUND
* EQUITY INDEX FUND * EMERGING GROWTH FUND
* BALANCED FUND * REGIONAL EQUITY FUND
* LIMITED VOLATILITY STOCK FUND * SPECIAL EQUITY FUND
* ASSET ALLOCATION FUND * TECHNOLOGY FUND
* EQUITY INCOME FUND * INTERNATIONAL FUND
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, INCLUDING FIRST BANK NATIONAL ASSOCIATION AND ANY OF
ITS AFFILIATES, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN
THE FUNDS INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, DUE
TO FLUCTUATIONS IN EACH FUND'S NET ASSET VALUE.
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. It should be read and
retained for future reference.
A Statement of Additional Information dated January 31, 1995 for the Funds
has been filed with the Securities and Exchange Commission and is
incorporated in its entirety by reference in this Prospectus. To obtain
copies of the Statement of Additional Information at no charge, or to obtain
other information or make inquiries about the Funds, call (800) 637-2548 or
write SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 31, 1995.
SUMMARY
First American Investment Funds, Inc. ("FAIF") is an open-end investment
company which offers shares in several different mutual funds. This
Prospectus provides information with respect to the Class A and Class B
Shares of the following funds (the "Funds"):
STOCK FUND has a primary objective of capital appreciation and a secondary
objective to provide current income. Under normal market conditions, the Fund
invests at least 80% of its total assets in equity securities diversified among
a broad range of industries and among companies that have a market
capitalization of at least $500 million. In selecting equity securities, the
Fund's adviser employs a value-based selection discipline.
EQUITY INDEX FUND has an objective of providing investment results that
correspond to the performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"). The Fund invests substantially in common stocks included
in the S&P 500. The Fund's adviser believes that its objective can best be
achieved by investing in the common stocks of approximately 250 to 500 of the
issues included in the S&P 500.
BALANCED FUND has an objective of maximizing total return (capital appreciation
plus income). The Fund seeks to achieve its objective by investing in a balanced
portfolio of equity securities and fixed income securities. Over the long term,
it is anticipated that the Fund's asset mix will average approximately 60%
equity securities and 40% fixed income securities, with the asset mix normally
ranging between 40% and 75% equity securities, between 25% and 60% fixed income
securities, and between 0% and 25% money market instruments.
LIMITED VOLATILITY STOCK FUND has a primary objective of maximizing total return
(capital appreciation plus income) within the constraint of controlling the
volatility of the Fund to a level below that of the major market indices such as
the S&P 500 and the Dow Jones Industrial Average, and a secondary objective to
provide current income at a level that exceeds that of the S&P 500. Under normal
market conditions, the Fund invests at least 80% of its total assets in equity
securities diversified among a broad range of industries and among companies
that have a market capitalization of at least $500 million.
ASSET ALLOCATION FUND has an objective of maximizing total return over the long
term by allocating its assets principally among common stocks, bonds, and
short-term instruments. There are no limitations on the proportions in which the
Fund's adviser may allocate the Fund's investments among these three classes of
assets, and the Fund may at times be fully invested in a single asset class if
the adviser believes that it offers the most favorable total return outlook.
EQUITY INCOME FUND has an objective of long-term growth of capital and income.
Under normal market conditions, the Fund invests at least 80% of its total
assets in equity securities of issuers believed by the Fund's adviser to be
characterized by sound management, the ability to finance expected growth and
the ability to pay above average dividends.
DIVERSIFIED GROWTH FUND has a primary objective of long-term growth of capital
and a secondary objective to provide current income. Under normal market
conditions, the Fund invests at least 80% of its total assets in equity
securities of a diverse group of companies that will provide representation
across all economic sectors included in the S&P 500. The adviser may overweight
the Fund's portfolio holdings in sectors that it believes provide above average
total return potential.
EMERGING GROWTH FUND has an objective of growth of capital. Under normal market
conditions, the Fund invests at least 65% of its total assets in equity
securities of small-sized companies that exhibit, in the adviser's opinion,
outstanding potential for superior growth. Companies that participate in sectors
that are identified by the adviser as having long-term growth potential
generally are expected to make up a substantial portion of the Fund's holdings.
REGIONAL EQUITY FUND has an objective of capital appreciation. The Fund seeks to
achieve its objective by investing, in normal market conditions, at least 65% of
its total assets in equity securities of small-sized companies headquartered in
Minnesota, North and South Dakota, Montana, Wisconsin, Michigan, Iowa, Nebraska,
Colorado and Illinois. The Fund invests in the securities of rapidly growing
companies within this size category and geographic area.
SPECIAL EQUITY FUND has an objective of capital appreciation. Under normal
market conditions, the Fund invests at least 65% of its total assets in equity
securities. The Fund's policy is to invest in equity securities which the Fund's
adviser believes offer the potential for greater than average capital
appreciation. The adviser believes that this policy can best be achieved by
investing in the equity securities of companies where fundamental changes are
occurring, are likely to occur, or have occurred and where, in the opinion of
the adviser, the changes have not been adequately reflected in the price of the
securities.
TECHNOLOGY FUND has an objective of long-term growth of capital. Under normal
market conditions, the Fund invests at least 80% of its total assets in equity
securities. The Fund anticipates investing in companies which the Fund's adviser
believes have, or will develop, products, processes or services that will
provide or will benefit significantly from technological advances and
improvements.
INTERNATIONAL FUND has an objective of long-term growth of capital. Under normal
market conditions, the Fund invests at least 65% of its total assets in an
internationally diversified portfolio of equity securities which trade in
markets other than the United States. Investments are expected to be made
primarily in developed markets and larger capitalization companies. However, the
Fund also may invest in emerging markets where smaller capitalization companies
are the norm.
INVESTMENT ADVISER AND SUB-ADVISER First Bank National Association (the
"Adviser") serves as investment adviser to each of the Funds. Marvin & Palmer
Associates, Inc. (the "Sub-Adviser") serves as sub-adviser to International
Fund. See "Management."
DISTRIBUTOR; ADMINISTRATOR SEI Financial Services Company (the "Distributor")
serves as the distributor of the Funds' shares. SEI Financial Management
Corporation (the "Administrator") serves as the administrator of the Funds. See
"Management" and "Distributor."
OFFERING PRICES Class A Shares of the Funds are sold at net asset value plus a
maximum sales charge of 4.50%. These sales charges are reduced on purchases of
$50,000 or more. Purchases of $1 million or more of Class A Shares are not
subject to an initial sales charge, but a contingent deferred sales charge of
1.00% will be imposed on such purchases in the event of redemption within 24
months following the purchase. Class A Shares of the Funds otherwise are
redeemed at net asset value without any additional charge. Class A Shares of
each Fund are subject to a Rule 12b-1 distribution and service fee computed at
an annual rate of 0.25% of the average daily net assets of that class. See
"Investing in the Funds -- Alternative Sales Charge Options."
Class B Shares of the Funds are sold at net asset value without an initial
sales charge. Class B Shares of each Fund are subject to Rule 12b-1
distribution and service fees computed at an annual rate totaling 1.00% of
the average daily net assets of that class. If Class B Shares are redeemed
within six years after purchase, they are subject to a contingent deferred
sales charge declining from 5.00% in the first year to zero after six years.
Class B Shares automatically convert into Class A Shares approximately eight
years after purchase. See "Investing in the Funds -- Alternative Sales Charge
Options."
MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS The minimum initial investment is
$1,000 ($250 for IRAs) for each Fund. Subsequent investments must be $100 or
more. Regular investment in the Funds is simplified through the Systematic
Investment Program through which monthly purchases of $100 or more are possible.
See "Investing in the Funds -- Minimum Investment Required" and "-- Systematic
Investment Program."
EXCHANGES Shares of any Fund may be exchanged for the same class of shares of
other FAIF funds at the shares' respective net asset values with no additional
charge. See "Investing in the Funds -- Exchange Privilege."
REDEMPTIONS Shares of each Fund may be redeemed at any time at their net asset
value next determined after receipt of a redemption request by the Funds'
transfer agent, less any applicable contingent deferred sales charge. Each Fund
may, upon 60 days written notice, redeem an account if the account's net asset
value falls below $500. See "Investing in the Funds" and "Redeeming Shares."
RISKS TO CONSIDER Each of the Funds is subject to the risk of generally adverse
equity markets. Investors also should recognize that market prices of equity
securities generally, and of particular companies' equity securities, frequently
are subject to greater volatility than prices of fixed income securities.
Because each of the Funds other than Equity Index Fund is actively managed to
a greater or lesser degree, their performance will reflect in part the
ability of the Adviser or Sub-Adviser to select securities which are suited
to achieving their investment objectives. Due to their active management,
these Funds could underperform other mutual funds with similar investment
objectives or the market generally.
In addition, (i) certain of the Funds are subject to risks associated with
investing in smaller-capitalization companies; (ii) Regional Equity Fund is
subject to risks associated with concentrating its investments in a single
geographic region; (iii) Technology Fund is subject to risks associated with
concentrating its investments in a single or related economic sectors; (iv)
International Fund is subject to risks associated with investing in foreign
securities and to currency risk; (v) Equity Income Fund may invest a portion
of its assets in less than investment grade convertible debt obligations;
(vi) certain Funds other than International Fund may invest specified
portions of their assets in securities of foreign issuers which are listed on
a United States stock exchange or represented by American Depository Receipts
or, in the case of Balanced Fund, are debt obligations of foreign issuers
denominated in United States dollars; and (vii) certain Funds may invest (but
not for speculative purposes) in stock index futures contracts, options on
stock indices, options on stock index futures, index participation contracts
based on the S&P 500, and/or exchange traded put and call options on interest
rate futures contracts and on interest rates indices. See "Investment
Objectives and Policies" and "Special Investment Methods."
SHAREHOLDER INQUIRIES Any questions or communications regarding the Funds or a
shareholder account should be directed to the Distributor by calling (800)
637-2548, or to the financial institution which holds shares on an investor's
behalf.
FEES AND EXPENSES RETAIL CLASSES
<TABLE>
<CAPTION>
CLASS A SHARE FEES AND EXPENSES
EQUITY LIMITED
STOCK INDEX BALANCED VOLATILITY
FUND FUND FUND STOCK FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases
(as a percentage of offering price)(1) 4.50% 4.50% 4.50% 4.50%
Maximum sales load imposed on
reinvested dividends None None None None
Deferred sales load(1) None None None None
Redemption fees None None None None
Exchange fees None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment advisory fee (after voluntary
fee waivers and reimbursements)(2) 0.56% 0.09% 0.52% 0.08%
Rule 12b-1 fees 0.25% 0.25% 0.25% 0.25%
Other expenses (after voluntary fee
waivers and reimbursements)(2) 0.24% 0.26% 0.28% 0.67%
Total fund operating expenses
(after voluntary fee waivers
and reimbursements)(2) 1.05% 0.60% 1.05% 1.00%
EXAMPLE(3)
You would pay the following expenses
on a $1,000 investment, assuming (i) the
maximum applicable sales charge for all
funds; (ii) a 5% annual return; and
(iii) redemption at the end of each time period:
1 year $ 55 $ 51 $ 55 $ 55
3 years $ 77 $ 63 $ 77 $ 75
5 years $ 100 $ 77 $ 100 $ 98
10 years $ 167 $ 117 $ 167 $ 162
</TABLE>
(table continued)
<TABLE>
<CAPTION>
ASSET EQUITY EMERGING REGIONAL SPECIAL
ALLOCATION INCOME DIVERSIFIED GROWTH EQUITY EQUITY TECHNOLOGY INTERNATIONAL
FUND FUND GROWTH FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
None None None None None None None None
None None None None None None None None
None None None None None None None None
None None None None None None None None
0.54% 0.34% 0.37% 0.26% 0.63% 0.62% 0.45% 0.98%
0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
0.26% 0.41% 0.38% 0.59% 0.22% 0.28% 0.45% 0.77%
1.05% 1.00% 1.00% 1.10% 1.10% 1.15% 1.15% 2.00%
$ 55 $ 55 $ 55 $ 56 $ 56 $ 56 $ 56 $ 64
$ 77 $ 75 $ 77 $ 78 $ 78 $ 80 $ 80 $ 105
$ 100 $ 98 $ 98 $ 103 $ 103 $ 105 $ 105 $ 148
$ 167 $ 162 $ 162 $ 173 $ 173 $ 178 $ 178 $ 267
</TABLE>
(1) The rules of the Securities and Exchange Commission require that the
maximum sales charge be reflected in the above table. However, certain
investors may qualify for reduced sales charges. Purchases of $1 million or
more of Class A Shares are not subject to an initial sales charge, but a
contingent deferred sales charge of 1.00% will be imposed in the case of
redemption within 24 months following the purchase. See "Investing in the
Funds -- Alternative Sales Charge Options."
(2) The Adviser and the Administrator intend to waive a portion of their fees
and/or reimburse expenses on a voluntary basis, and the amounts shown
reflect these waivers and reimbursements as of the date of this Prospectus.
Each of these persons intends to maintain such waivers and reimbursements
in effect for the current fiscal year but reserves the right to discontinue
such waivers and reimbursements at any time in its sole discretion. Absent
any fee waivers, investment advisory fees as an annualized percentage of
average daily net assets would be 0.70% for each Fund except International
Fund, as to which they would be 1.25%; and total fund operating expenses
calculated on such basis would be 1.20% for Stock Fund, 1.23% for Equity
Index Fund, 1.24% for Balanced Fund, 1.63% for Limited Volatility Stock
Fund, 1.29% for Asset Allocation Fund, 1.39% for Equity Income Fund, 1.33%
for Diversified Growth Fund, 2.84% for Emerging Growth Fund, 1.25% for
Regional Equity Fund, 1.23% for Special Equity Fund, 3.37% for Technology
Fund and 2.30% for International Fund. Other expenses includes an
administration fee and is based on estimated amounts for the current fiscal
year.
(3) Absent the fee waivers and reimbursements referred to in (2) above, the
dollar amounts for the 1, 3, 5 and 10-year periods would be as follows:
Stock Fund, $57, $81, $108 and $184; Equity Index Fund, $57, $82, $110 and
$187; Balanced Fund, $57, $83, $110 and $188; Limited Volatility Stock
Fund, $61, $94, $130 and $230; Asset Allocation Fund, $58, $84, $113 and
$194; Equity Income Fund, $59, $87, $118 and $204; Diversified Growth Fund,
$58, $85, $115 and $198; Emerging Growth Fund, $72, $129, $188 and $347;
Regional Equity Fund, $57, $83, $111 and $189; Special Equity Fund, $57,
$82, $110 and $187; Technology Fund, $77, $144, $213 and $394; and
International Fund, $67, $114, $162 and $297.
CLASS B SHARE FEES AND EXPENSES
<TABLE>
<CAPTION>
EQUITY LIMITED ASSET EQUITY
STOCK INDEX BALANCED VOLATILITY ALLOCATION INCOME DIVERSIFIED
FUND FUND FUND STOCK FUND FUND FUND GROWTH FUND
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on
purchases (as a percentage of offering
price) None None None None None None None
Maximum sales load imposed on
reinvested dividends None None None None None None None
Maximum contingent deferred sales
charge (as a percentage of original
purchase price or redemption proceeds,
as applicable) 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Redemption fees None None None None None None None
Exchange fees None None None None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment advisory fees (after
voluntary fee waivers and
reimbursements)(1) 0.56% 0.09% 0.52% 0.08% 0.54% 0.34% 0.37%
Rule 12b-1 fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses (after voluntary fee
waivers and reimbursements)(1) 0.24% 0.26% 0.28% 0.67% 0.26% 0.41% 0.38%
Total fund operating expenses
(after voluntary fee waivers
and reimbursements)(1) 1.80% 1.35% 1.80% 1.75% 1.80% 1.75% 1.75%
EXAMPLE(2)
You would pay the following expenses on
a $1,000 investment, assuming (i) a 5%
annual return; (ii) redemption at the end
of each time period; and (iii)
payment of the maximum applicable contingent
deferred sales charge of 5% in
year 1, 4% in year 3, 2% in year 5, and
automatic conversion to Class A shares
at the end of year 8:
1 year $ 68 $ 64 $ 68 $ 68 $ 68 $ 68 $ 68
3 years $ 97 $ 83 $ 97 $ 95 $ 97 $ 95 $ 95
5 years $ 117 $ 94 $ 117 $ 115 $ 117 $ 115 $ 115
10 years $ 192 $ 142 $ 192 $ 186 $ 192 $ 186 $ 186
(table continued)
EMERGING REGIONAL SPECIAL
GROWTH EQUITY EQUITY TECHNOLOGY INTERNATIONAL
FUND FUND FUND FUND FUND
None None None None None
None None None None None
5.00% 5.00% 5.00% 5.00% 5.00%
None None None None 0.00%
None None None None None
0.26% 0.63% 0.62% 0.45% 0.98%
1.00% 1.00% 1.00% 1.00% 1.00%
0.59% 0.22% 0.28% 0.45% 0.77%
1.85% 1.85% 1.90% 1.90% 2.75%
$ 69 $ 69 $ 69 $ 69 $ 78
$ 98 $ 98 $ 100 $ 100 $ 125
$ 120 $ 120 $ 123 $ 123 $ 165
$ 197 $ 197 $ 202 $ 202 $ 290
</TABLE>
(1) The Adviser and the Administrator intend to waive a portion o f their fees
and/or reimburse expenses on a voluntary basis, and the amounts shown
reflect these waivers and reimbursements as of the date of this Prospectus.
Each of these persons intends to maintain such waivers and reimbursements
in effect for the current fiscal year but reserves the right to discontinue
such waivers and reimbursements at any time in its sole discretion. Absent
any fee waivers, investment advisory fees for each Fund as an annualized
percentage of average daily net assets would be 0.70% for each Fund except
International Fund, as to which they would be 1.25%; and total fund
operating expenses calculated on such basis would be 1.95% for Stock Fund,
1.98% for Equity Index Fund, 1.99% for Balanced Fund, 2.38% for Limited
Volatility Stock Fund, 2.04% for Asset Allocation Fund, 2.14% for Equity
Income Fund, 2.08% for Diversified Growth Fund, 3.59% for Emerging Growth
Fund, 2.00% for Regional Equity Fund, 1.98% for Special Equity Fund, 4.12%
for Technology Fund and 3.05% for International Fund. Other expenses
includes an administration fee and is based on estimated amounts for the
current fiscal year.
(2) Absent the fee waivers and reimbursements referred to in (1) above, the
dollar amounts for the 1, 3, 5 and 10-year periods would be as follows:
Stock Fund, $70, $101, $125 and $208; Equity Index Fund, $70, $102, $127
and $211; Balanced Fund, $70, $102, $127 and $212; Limited Volatility Stock
Fund, $74, $114, $147 and $253; Asset Allocation Fund, $71, $104, $130 and
$217; Equity Income Fund; $72, $107, $135 and $228; Diversified Growth
Fund, $71, $105, $132 and $222; Emerging Growth Fund, $86, $150, $206 and
$368; Regional Equity Fund, $70, $103, $128 and $213; Special Equity Fund,
$70, $102, $127 and $211; Technology Fund, $91, $165, $231 and $414; and
International Fund, $81, $134, $180 and $319.
INFORMATION CONCERNING FEES AND EXPENSES
The purpose of the preceding tables is to assist the investor in
understanding the various costs and expenses that an investor in a Fund may
bear directly or indirectly. THE EXAMPLES CONTAINED IN THE TABLES SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. The information set forth in the
foregoing tables and examples relates only to the Class A and Class B Shares
of the Funds. The Funds also offer Class C Shares which are subject to the
same expenses except that they bear no sales loads and distribution fees.
The examples in the above tables are based on projected annual Fund operating
expenses after voluntary fee waivers and expense reimbursements by the
Adviser, the Distributor and the Administrator. Although these persons intend
to maintain such waivers in effect for the current fiscal year, any such
waivers are voluntary and may be discontinued at any time. Prior to fee
waivers, investment advisory fees accrue at the annual rate as a percentage
of average daily net assets of 0.70% for each of the Funds except
International Fund, as to which they are 1.25%.
The Class A Shares of each Fund may pay distribution and service fees to the
Distributor in an amount equaling 0.25% per year of each such class's average
daily net assets, and the Class B Shares of each Fund bear distribution and
servicing fees totaling 1.00% per year of each such class's average daily net
assets. The Distributor also receives the sales charge for distributing the
Funds' Class A Shares. Due to the distribution fees paid by these classes of
shares, long-term shareholders may pay more than the equivalent of the
maximum front-end sales charges otherwise permitted by NASD rules. For
additional information, see "Distributor."
Other expenses include fees paid by each Fund to the Administrator for
providing various services necessary to operate the Funds. These include
shareholder servicing and certain accounting and other services. The
Administrator provides these services for a fee calculated at an annual rate
of 0.12% of average daily net assets of each Fund subject to a minimum of
$50,000 per Fund per fiscal year; provided, that to the extent that the
aggregate net assets of all First American funds exceed $8 billion, the
percentage stated above is reduced to 0.105%. Other expenses of the Funds
also includes the cost of maintaining shareholder records, furnishing
shareholder statements and reports, and other services. Investment advisory
fees, administrative fees and other expenses are reflected in the Funds'
daily dividends and are not charged to individual shareholder accounts.
FINANCIAL HIGHLIGHTS
The following audited financial highlights should be read in conjunction with
the Funds' financial statements, the related notes thereto and the
independent auditors' report appearing in the Statement of Additional
Information.
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
UNREALIZED DIVIDENDS
NET ASSET VALUE NET GAINS OR FROM NET DISTRIBUTIONS NET ASSET
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT FROM CAPITAL VALUE END
PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
STOCK FUND
Class A
1994 $ 16.00 $ 0.31 $ 1.00 $ (0.30) $(0.50) $ 16.51 8.35%
1993 14.04 0.22 1.99 (0.23) (0.02) 16.00 15.82%
1992 13.62 0.24 0.81 (0.29) (0.34) 14.04 7.88%
1991(1) 10.64 0.28 2.95 (0.22) (0.03) 13.62 30.49%+
1990(2) 12.09 0.25 (1.17) (0.25) (0.28) 10.64 (8.22)%
1989(2) 10.35 0.25 1.70 (0.20) (0.01) 12.09 20.33%
1988(2)(3) 10.03 0.27 0.35 (0.30) - 10.35 6.40%+
Class B
1994(4) $ 16.65 $ 0.03 $ (0.10) $ (0.09) - $ 16.49 (0.43)%+
EQUITY INDEX FUND
Class A
1994 $ 10.60 $ 0.25 $ 0.09 $ (0.25) $(0.01) $10.68 3.25%
1993(5) 10.00 0.20 0.60 (0.20) - 10.60 8.02%+
Class B
1994(4) $ 10.68 $ 0.01 $ 0.04 $ (0.07) - $ 10.66 0.48%+
BALANCED FUND
Class A
1994 $ 10.73 $ 0.34 $ (0.02) $ (0.34) $(0.17) $10.54 3.02%
1993(5) 10.00 0.28 0.75 (0.28) (0.02) 10.73 10.39%+
Class B
1994(4) $ 10.66 $ 0.06 $ (0.12) $ (0.07) - $ 10.53 (0.55)%+
ASSET ALLOCATION FUND
Class A
1994 $ 10.60 $ 0.27 $ (0.08) $ (0.26) $(0.14) $10.39 1.81%
1993(5) 10.00 0.19 0.60 (0.19) - 10.60 8.01%+
Class B
1994(4) $ 10.40 $ 0.05 $ (0.03) $ (0.05) - $ 10.37 0.19%
EQUITY INCOME FUND
Class A
1994(6) $ 9.87 $ 0.41 -- $ (0.39) - $ 9.89 4.22%+
1993(7)(8) 10.00 0.57 (0.14) (0.56) - 9.87 4.44%+
Class B
1994(4) $ 9.87 $ 0.04 $ 0.02 $ (0.05) - $ 9.88 0.57%+
DIVERSIFIED GROWTH FUND
Class A
1994(6) $ 9.39 $ 0.10 $ (0.29) $ (0.11) - $ 9.09 (2.07)%+
1993(7)(8) 10.00 0.11 (0.63) (0.09) - 9.39 (5.18)%+
Class B
1994(4) $ 8.87 $ 0.01 $ 0.23 $ (0.02) - $ 9.09 2.75%+
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE NET
NET ASSETS EXPENSES TO INCOME TO ASSETS
END OF AVERAGE NET AVERAGE NET (EXCLUDING PORTFOLIO TURNOVER
PERIOD (000) ASSETS ASSETS WAIVERS) RATE
$ 8,421 0.76% 1.51% 1.20% 65%
134,186 0.75 1.94 1.28 48
3,644 1.45 1.75 4.46 39
2,386 1.45 2.47 7.42 76
1,161 1.45 2.24 9.47 41
323 1.24 2.26 36.39 74
206 1.02 2.67 28.60 80
$ 346 1.75% 1.58% 2.01% 65%
$ 758 0.35% 2.23% 1.23% 11%
139,957 0.35 2.52 1.30 1
$ 29 1.35% 1.68% 2.03% 11%
$ 13,734 0.77% 2.63% 1.24% 98%
111,225 0.75 3.31 1.29 77
$ 270 1.75% 2.80% 2.05% 98%
$ 707 0.75% 2.01% 1.29% 32%
56,393 0.75 2.40 1.34 31
$ 11 1.75% 1.94% 2.12% 32%
$ 1,852 0.88% 4.88% 1.39% 108%
28,786 0.75 6.09 1.36 68
$ 1 1.75% 4.39% 2.14% 108 %
$ 1,900 0.90% 1.15% 1.33% 101%
31,084 0.78 1.26 1.25 5
$ 12 1.75% 1.20% 2.08% 101%
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
* Represents distributions in excess of net realized gains.
(1) On September 3, 1991, the Board of Directors of FAIF approved a change in
FAIF's fiscal year end from October 31 to September 30, effective September
30, 1991. All ratios for the period have been annualized.
(2) For the period ended October 31.
(3) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(4) Class B shares have been offered since August 15, 1994. All ratios for the
period have been annualized.
(5) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(6) Prior to March 28, 1994, these funds were advised by Boulevard Bank
National Association. On April 28, 1994 the Board of Directors approved a
change in the fiscal year end from November 30 to September 30, effective
September 30, 1994. All ratios for the period have been annualized.
(7) For the period ended November 30.
(8) Commenced operations on December 18, 1992. All ratios for the period have
been annualized.
(9) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(10) Class A shares have been offered since April 7, 1994. All ratios for the
period have been annualized.
FINANCIAL HIGHLIGHTS
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
UNREALIZED DIVIDENDS
NET ASSET VALUE NET GAINS OR FROM NET DISTRIBUTIONS NET ASSET
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT FROM CAPITAL VALUE END
PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
EMERGING GROWTH FUND
Class A
1994(9) $ 10.00 $ 0.01 $ 0.57 $ (0.01) $ -- $ 10.57 5.88%+
Class B
1994(4) $ 9.89 $(0.01) $ 0.67 $ -- $ -- $ 10.55 6.67%+
REGIONAL EQUITY FUND
Class A
1994 $ 11.96 $ 0.08 $ 0.71 $ (0.07) $(0.16) $ 12.52 6.76%
1993(5) 10.00 0.05 1.96 (0.05) $ -- 11.96 20.17%+
Class B
1994(4) $ 12.19 $ -- $ 0.33 $ (0.02) $ -- $ 12.50 2.73%+
SPECIAL EQUITY FUND
Class A
1994 $ 15.81 $ 0.28 $ 2.52 $ (0.28) $(1.03) $ 17.30 18.70%
1993 13.61 0.23 2.32 (0.25) (0.10) 15.81 18.91%
1992 12.98 0.21 1.61 (0.27) (0.92) 13.61 15.17%
1991(1) 10.33 0.30 2.61 (0.26) -- 12.98 28.38%+
1990(2) 12.96 0.47 (2.03) (0.46) (0.61) 10.33 (13.24)%
1989(2) 11.55 0.47 1.39 (0.41) (0.04) 12.96 17.41%
1988(2)(3) 10.03 0.34 1.57 (0.39) $ -- 11.55 19.56%+
Class B
1994(4) $ 16.51 $ 0.01 $ 0.85 $ (0.08) $ -- $ 17.29 5.22%+
TECHNOLOGY FUND
Class A
1994(9) $ 10.00 $(0.01) $ 1.20 $ -- $ -- $ 11.19 11.90%+
Class B
1994(4) $ 9.85 $(0.02) $ 1.34 $ -- $ -- $ 11.17 13.40%+
INTERNATIONAL FUND
Class A
1994(10) $ 9.98 $(0.01) $ 0.24 $ -- $ -- $ 10.21 2.30%+
Class B
1994(4) $ 10.23 $(0.01) $ (0.01) $ -- $ -- $ 10.21 (0.20)%+
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE NET
NET ASSETS EXPENSES TO INCOME TO ASSETS
END OF AVERAGE NET AVERAGE NET (EXCLUDING PORTFOLIO TURNOVER
PERIOD (000) ASSETS ASSETS WAIVERS) RATE
$ 91 0.79% 0.23% 2.84% 19%
$ 18 1.80% (0.85)% 3.59% 19%
$ 8,345 0.82% 0.59% 1.25% 41%
58,427 0.80 0.59 1.30 28
$ 185 1.80% (0.41)% 2.05% 41%
$ 7,333 0.81% 1.88% 1.23% 116%
81,899 0.81 2.07 1.31 104
3,586 1.50 1.61 4.18 146
3,423 1.50 2.60 5.13 116
2,761 1.50 4.09 4.21 113
2,000 1.38 4.07 8.68 102
578 1.20 4.02 15.60 51
$ 370 1.68% 0.47% 2.03% 116%
$ 61 0.80% (0.21)% 3.37% 43%
$ 2 1.80% (1.44)% 4.12% 43 %
$ 464 1.75% (0.26)% 2.30% 16%
$ 22 2.75% (0.71)% 3.05% 16%
</TABLE>
THE FUNDS
FAIF is an open-end management investment company which offers shares in
several different mutual funds (collectively, the "FAIF Funds"), each of
which evidences an interest in a separate and distinct investment portfolio.
Shareholders may purchase shares in each FAIF Fund through three separate
classes (Class A, Class B and Class C) which provide for variations in
distribution costs, voting rights and dividends. Except for these differences
among classes, each share of each FAIF Fund represents an undivided
proportionate interest in that fund. FAIF is incorporated under the laws of
the State of Maryland, and its principal offices are located at 680 East
Swedesford Road, Wayne, Pennsylvania 19087.
This Prospectus relates only to the Class A and Class B Shares of the Funds
named on the cover hereof. Information regarding the Class C Shares of these
Funds and regarding the Class A, Class B and Class C Shares of the other FAIF
Funds is contained in separate prospectuses that may be obtained from FAIF's
Distributor, SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087, or by calling (800) 637-2548. The Board of Directors of
FAIF may authorize additional series or classes of common stock in the
future.
INVESTMENT OBJECTIVES AND POLICIES
This section describes the investment objectives and policies of the Funds.
There is no assurance that any of these objectives will be achieved. The
Funds' investment objectives are not fundamental and therefore may be changed
without a vote of shareholders. Such changes could result in a Fund having
investment objectives different from those which shareholders considered
appropriate at the time of their investment in a Fund. Shareholders will
receive written notification at least 30 days prior to any change in a Fund's
investment objectives. Each of the Funds except Technology Fund is a
diversified investment company, as defined in the Investment Company Act of
1940 (the "1940 Act"). Technology Fund is a non-diversified company under the
1940 Act.
If a percentage limitation on investments by a Fund stated below or in the
Statement of Additional Information is adhered to at the time of an
investment, a later increase or decrease in percentage resulting from changes
in asset values will not be deemed to violate the limitation. A Fund which is
limited to investing in securities with specified ratings is not required to
sell a security if its rating is reduced or discontinued after purchase, but
the Fund may consider doing so. However, except in the case of Equity Income
Fund, in no event will more than 5% of any Fund's net assets be invested in
non-investment grade securities. Descriptions of the rating categories of
Standard & Poor's Corporation ("Standard & Poor's") and Moody's Investors
Service, Inc. ("Moody's") are contained in the Statement of Additional
Information.
When the term "equity securities" is used in this Prospectus, it refers to
common stock and securities which are convertible into or exchangeable for,
or which carry warrants or other rights to acquire, common stock.
This section also contains information concerning certain investment risks
borne by Fund shareholders under the heading "-- Risks to Consider." Further
information concerning the securities in which the Funds may invest and
related matters is set forth under "Special Investment Methods."
STOCK FUND
OBJECTIVES. Stock Fund has a primary objective of capital appreciation. A
secondary objective of the Fund is to provide current income.
INVESTMENT POLICIES. Under normal market conditions, Stock Fund invests at least
80% of its total assets in equity securities (and at least 65% in common stocks)
diversified among a broad range of industries and among companies that have a
market capitalization of at least $500 million. In selecting equity securities,
the Adviser employs a value-based selection discipline. The Adviser anticipates
investing in equity securities of companies it believes are selling at less than
fair value and offer the potential for appreciation as a result of improved
profitability reflecting corporate restructuring or elimination of unprofitable
operations, change in management or management goals, or improving demand for
the companies' goods or services.
The Fund also may invest up to 20% of its total assets in the aggregate in
equity securities of issuers with a market capitalization of less than $500
million and in fixed income securities of the kinds described under "Special
Investment Methods -- Fixed Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
EQUITY INDEX FUND
OBJECTIVE. Equity Index Fund has an objective of providing investment results
that correspond to the performance of the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500").
INVESTMENT POLICIES. Equity Index Fund invests substantially (at least 65% of
total assets) in common stocks included in the S&P 500. The Adviser believes
that the Fund's objective can best be achieved by investing in the common stocks
of approximately 250 to 500 of the issues included in the S&P 500, depending on
the size of the Fund.
Standard & Poor's designates the stocks included in the S&P 500 on a
statistical basis. A particular stock's weighting in the S&P 500 is based on
its total market value (that is, its market price per share times the number
of shares outstanding) relative to that of all stocks included in the S&P
500. From time to time, Standard & Poor's may add or delete stocks to or from
the S&P 500. Inclusion of a particular stock in the S&P 500 does not imply
any opinion by Standard & Poor's as to its merits as an investment, nor is
Standard & Poor's a sponsor of or in any way affiliated with the Fund.
The Fund is managed by utilizing a computer program that identifies which
stocks should be purchased or sold in order to replicate, as closely as
possible, the composition of the S&P 500. The Fund includes a stock in its
investment portfolio in the order of the stock's weighting in the S&P 500,
starting with the most heavily weighted stock. Thus, the proportion of Fund
assets invested in a stock or industry closely approximates the percentage of
the S&P 500 represented by that stock or industry. Portfolio turnover is
expected to be well below that of actively managed mutual funds.
Although the Fund will not duplicate the S&P 500's performance precisely, it
is anticipated that there will be a close correlation between the Fund's
performance and that of the S&P 500 in both rising and falling markets. The
Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least 95%, without taking into
account expenses of the Fund. A perfect correlation would be indicated by a
figure of 100%, which would be achieved if the Fund's net asset value,
including the value of its dividends and capital gains distributions,
increased or decreased in exact proportion to changes in the S&P 500. The
Fund's ability to replicate the performance of the S&P 500 may be affected
by, among other things, changes in securities markets, the manner in which
Standard & Poor's calculates the S&P 500, and the amount and timing of cash
flows into and out of the Fund. Although cash flows into and out of the Fund
will affect the Fund's portfolio turnover rate and its ability to replicate
the S&P 500's performance, investment adjustments will be made, as
practicably as possible, to account for these circumstances.
The Fund also may invest up to 20% of its total assets in the aggregate in
stock index futures contracts, options on stock indices, options on stock
index futures, and index participation contracts based on the S&P 500. The
Fund will not invest in these types of contracts and options for speculative
purposes, but rather to maintain sufficient liquidity to meet redemption
requests; to increase the level of Fund assets devoted to replicating the
composition of the S&P 500; and to reduce transaction costs. These types of
contracts and options and certain associated risks are described under
"Special Investment Methods -- Options Transactions."
In order to maintain liquidity during times of unusual market conditions, the
Fund also may invest temporarily in cash and cash items of the kinds
described under "Special Investment Methods -- Cash Items."
BALANCED FUND
OBJECTIVE. Balanced Fund has an objective of maximizing total return (capital
appreciation plus income).
INVESTMENT POLICIES. Balanced Fund seeks to achieve its objective by investing
in a balanced portfolio of equity securities and fixed income securities. The
asset mix of the Fund normally will range between 40% and 75% equity securities,
between 25% and 60% fixed income securities (including only that portion of the
value of convertible securities attributable to their fixed income
characteristics), and between 0% and 25% money market instruments. Over the long
term, it is anticipated that the Fund's asset mix will average approximately 60%
equity securities and 40% fixed income securities. The Adviser may make moderate
shifts among asset classes in order to attempt to increase returns or reduce
risk.
With respect to the equity security portion of the Fund's portfolio, the
Adviser follows the same investment policies as are described above under "--
Stock Fund -- Investment Policies."
The fixed income portion of the Fund's portfolio is invested in investment
grade debt securities, at least 65% of which are United States Government
obligations and corporate debt obligations and mortgage-related securities
rated at least A by Standard & Poor's or Moody's or which have been assigned
an equivalent rating by another nationally recognized statistical rating
organization. Under normal market conditions, the weighted average maturity
of the fixed income securities held by the Fund will not exceed 15 years.
The Fund's permitted fixed income investments include notes, bonds and
discount notes of United States Government agencies or instrumentalities;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated at least BBB by Standard & Poor's or Baa by Moody's, or
which have been assigned an equivalent rating by another nationally
recognized statistical rating organization, or which are of comparable
quality in the judgment of the Adviser; other investments, including
mortgage-backed securities, which are rated in one of the four highest
categories by a nationally recognized statistical rating organization or
which are of comparable quality in the judgment of the Adviser; and
commercial paper which is rated A-1 by Standard & Poor's or P-1 by Moody's or
which has been assigned an equivalent rating by another nationally recognized
statistical rating organization. Unrated securities will not exceed 10% in
the aggregate of the value of the total fixed income securities held by the
Fund.
Subject to the foregoing limitations, the fixed income securities in which
the Fund may invest include (i) mortgage-backed securities (provided that the
Fund will not invest more than 10% of its total fixed income assets in
interest-only, principal-only or inverse floating rate mortgage-backed
securities); (ii) asset-backed securities; and (iii) bank instruments. In
addition, the Fund may invest up to 15% of its total fixed income assets in
foreign securities payable in United States dollars. For information about
these kinds of investments and certain associated risks, see the related
headings under "Special Investment Methods," and for information concerning
certain risks associated with investing in fixed income securities generally,
see "Special Investment Methods -- Fixed Income Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; (v) engage in the lending of portfolio
securities; (vi) in order to attempt to reduce risk, invest in exchange
traded put and call options on interest rate futures contracts and on
interest rate indices; and (vii) in order to attempt to reduce risk, write
covered call options on interest rate indices. For information about these
investment methods and certain associated risks, see the related headings
under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
LIMITED VOLATILITY STOCK FUND
OBJECTIVES. Limited Volatility Stock Fund has a primary objective of maximizing
total return (capital appreciation plus income) within the constraint of
controlling the volatility of the Fund to a level below that of the major market
indices such as the S&P 500 and the Dow Jones Industrial Average. In this
respect, the Fund seeks to maintain a five year historical performance relative
to the S&P 500 at a beta level no greater than .95. A secondary objective of the
Fund is to provide current income at a level that exceeds that of the S&P 500.
INVESTMENT POLICIES. Under normal market conditions, Limited Volatility Stock
Fund invests a minimum of 80% of its total assets in equity securities (and at
least 65% in common stocks) diversified among a broad range of industries and
among companies that have a market capitalization of at least $500 million. The
Adviser's primary considerations when acquiring equity securities for the
Fund include their potential for total return as a result of factors such as
product development and demand, favorable operating ratios, resources for
expansion, management abilities, reasonableness of market price, and
favorable overall business prospects, along with the issue's ability to
contribute to controlling portfolio volatility. Receipt of dividends or
interest will be a secondary, but still important, concern. For example, when
equity securities appear to have similar potentials for total return, the
Adviser may base its investment decision upon which security has the greater
dividend or interest yield. Nevertheless, securities acquired by the Fund are
not required to pay dividends or earn interest.
The Fund also may invest up to 20% of its total assets in the aggregate in
equity securities of issuers with a market capitalization of less than $500
million and in fixed income securities of the kinds described under "Special
Investment Methods -- Fixed Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
ASSET ALLOCATION FUND
OBJECTIVE. Asset Allocation Fund has an objective of maximizing total return
over the long term by allocating its assets principally among common stocks,
bonds, and short-term instruments.
INVESTMENT POLICIES. Asset Allocation Fund allocates its investments principally
among (i) common stocks included in the S&P 500, (ii) direct obligations of the
United States Treasury, and (iii) short-term instruments. There are no
limitations on the proportions in which the Adviser may allocate the Fund's
investments among these three classes of assets. The Fund thus is not a
"balanced" fund, in that it is not required to allocate its investments in
specific proportions or ranges among these asset classes.
The Adviser regularly reviews the Fund's investment allocation and varies the
allocation to emphasize the asset class or classes that, in the Adviser's
then-current judgment, provide the most favorable total return outlook. There
is no limitation on the amount that may be invested in any one asset class,
and the Fund may at times be fully invested in a single asset class if the
Adviser believes that it offers the most favorable total return outlook.
In making asset allocation decisions, the Adviser utilizes a proprietary
quantitative model which predicts future asset class returns based on
historical experience using probability theory. By investing in common stocks
intended to approximate the total return of the S&P 500, as described below,
the Adviser attempts to minimize the risk of individual equity security
selection in the common stock class. By limiting the bond class to direct
obligations of the United States Treasury, the Adviser attempts to eliminate
credit risk from this class.
Within the common stock asset class, the Adviser seeks to produce a total
return approximating that of the S&P 500. In order to achieve this result,
the Adviser follows the same indexing-based policies for this asset class as
are described above under "-- Equity Index Fund -- Investment Policies."
Within the bond asset class, the Fund may invest in any maturity of direct
obligations of the United States Treasury. The Adviser thus has discretion in
determining the weighted average maturity of the investments within this
asset class. For information concerning certain risks associated with
investing in fixed income securities generally, see "Special Investment
Methods -- Fixed Income Securities."
Within the short-term asset class, the Fund may hold cash or invest in cash
items of the kinds described under "Special Investment Methods -- Cash
Items."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) purchase securities on a when-issued or
delayed-delivery basis; (iv) engage in the lending of portfolio securities;
(v) in order to attempt to reduce risk, invest in exchange traded put and
call options on interest rate futures contracts and on interest rate indices;
and (vi) in order to manage allocations among asset classes efficiently,
invest in interest rate and stock index futures. For information about these
investment methods and certain associated risks, see the related headings
under "Special Investment Methods."
EQUITY INCOME FUND
OBJECTIVE. Equity Income Fund has an objective of long-term growth of capital
and income.
INVESTMENT POLICIES. Under normal market conditions, Equity Income Fund invests
at least 80% of its total assets in equity securities of issuers believed by the
Adviser to be characterized by sound management, the ability to finance expected
growth and the ability to pay above average dividends.
The Fund invests in equity securities that have relatively high dividend
yields and which, in the Adviser's opinion, will result in a relatively
stable Fund dividend with a growth rate sufficient to maintain the purchasing
power of the income stream. Although the Adviser anticipates that higher
yielding equity securities will generally represent the core holdings of the
Fund, the Fund may invest in lower yielding but higher growth equity
securities to the extent that the Adviser believes such investments are
appropriate to achieve portfolio balance. All securities held by the Fund
will provide current income consistent with the Fund's investment objective.
The "equity securities" in which the Fund may invest include corporate debt
obligations which are convertible into common stock. These convertible debt
obligations may include obligations rated at the time of purchase as low as
CCC by Standard & Poor's or Caa by Moody's, or which have been assigned an
equivalent rating by another nationally recognized statistical rating
organization, or which are of comparable quality in the judgment of the
Adviser. Debt obligations rated less than BBB by Standard & Poor's or Baa by
Moody's are considered to be less than "investment grade" and are sometimes
referred to as "junk bonds." Obligations rated CCC by Standard & Poor's or
Caa by Moody's are considered to be of poor standing and are predominantly
speculative. Descriptions of Standard & Poor's and Moody's rating categories
are contained in the Statement of Additional Information. If the rating of an
obligation is reduced below the categories set forth above after purchase or
is discontinued, the Fund is not required to sell the obligation but may
consider doing so.
Purchases of less than investment grade convertible debt obligations are
intended to advance the Fund's objective of long-term growth of capital
through the "upside" potential of the obligations' conversion features and to
advance the Fund's objective of income through receipt of interest payable on
the obligations. The Fund will not invest more than 25% of its total assets
in convertible debt obligations which are rated less than investment grade or
which are of comparable quality in the judgment of the Adviser. For the year
ended September 30, 1994, the following weighted average percentages of the
Fund's total assets were invested in convertible and nonconvertible debt
obligations with the indicated Standard & Poor's ratings or their
equivalents: AAA, 0%; AA, 0%; A, 0%; BBB, 6%; BB, 0%; B, 5%; and CCC, 0%.
Debt obligations which are rated less than investment grade generally are
subject to greater market fluctuations and greater risk of loss of income and
principal due to default by the issuer than are higher-rated obligations. The
value of these obligations tends to reflect short-term corporate, economic,
interest rate and market developments and investor perceptions of the
issuer's credit quality to a greater extent than investment grade
obligations. In addition, since the market for these obligations is
relatively new and does not have as many participants as the market for
higher-rated obligations, it may be more difficult to dispose of or to
determine the value of these obligations. In the case of a convertible debt
obligation, these risks may be present in a greater degree where the
principal amount of the obligation is greater than the current market value
of the common stock into which it is convertible.
The Fund also may invest up to 20% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods -- Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods, see the related
headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
DIVERSIFIED GROWTH FUND
OBJECTIVES. Diversified Growth Fund has a primary objective of long-term growth
of capital. A secondary objective of the Fund is to provide current income.
INVESTMENT POLICIES. Under normal market conditions, Diversified Growth Fund
invests at least 80% of its total assets in equity securities of a diverse group
of companies that will provide representation across all economic sectors
included in the S&P 500. The Adviser may overweight the Fund's portfolio
holdings in sectors that it believes provide above average total return
potential and may underweight the Fund's holdings in those sectors that it
believes have a lower total return potential. Within a given sector, the Fund's
assets are invested in securities of those companies that, in the Adviser's
judgment, exhibit a combination of above average growth in revenue and earnings,
strong management and sound and improving financial condition.
The Fund also may invest up to 20% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods -- Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
EMERGING GROWTH FUND
OBJECTIVE. Emerging Growth Fund has an objective of growth of capital.
INVESTMENT POLICIES. Under normal market conditions, Emerging Growth Fund
invests at least 65% of its total assets in equity securities of small-sized
companies that exhibit, in the Adviser's opinion, outstanding potential for
superior growth. For these purposes, small-sized companies are deemed those with
market capitalizations of less than $1 billion. Companies that participate in
sectors that are identified by the Adviser as having long-term growth potential
generally are expected to make up a substantial portion of the Fund's holdings.
These companies often have established a market niche or have developed unique
products or technologies that are expected by the Adviser to produce superior
growth in revenues and earnings.
The Fund also may invest up to 35% of its total assets in the aggregate in
equity securities of issuers with a market capitalization of $1 billion or
more and in fixed income securities of the kinds described under "Special
Investment Methods -- Fixed Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
REGIONAL EQUITY FUND
OBJECTIVE. Regional Equity Fund has an objective of capital appreciation.
INVESTMENT POLICIES. Regional Equity Fund seeks to achieve its objective by
investing, in normal market conditions, at least 65% of its total assets in
equity securities of small-sized companies headquartered in Minnesota, North and
South Dakota, Montana, Wisconsin, Michigan, Iowa, Nebraska, Colorado and
Illinois.
The Adviser anticipates investing primarily in the securities of rapidly
growing small-sized companies which generally will have the following
characteristics, in the Adviser's opinion: (i) some kind of sustainable
uniqueness that will allow the company to grow, (ii) highly skilled
management, and (iii) undervaluation by the market. For these purposes,
small-sized companies are deemed those with market capitalizations of less
than $1 billion.
In addition to the risks associated with investing in smaller-capitalization
companies, see "-- Risk Factors -- Smaller-Capitalization Companies" below,
the Fund's policy of concentrating its equity investments in a geographic
region means that it will be subject to adverse economic, political or other
developments in that region. Although the region in which the Fund
principally invests has a diverse industrial base (including, but not limited
to, agriculture, mining, retail, transportation, utilities, heavy and light
manufacturing, financial services, insurance, computer technology and medical
technology), this industrial base is not as diverse as that of the country as
a whole. The Fund therefore may be less diversified by industry and company
than other funds with a similar investment objective and no geographic
limitation.
The Fund also may invest up to 35% of its total assets in the aggregate in
equity securities without regard to the location of the issuer's headquarters
or the issuer's market capitalization and in fixed income securities of the
kinds described under "Special Investment Methods -- Fixed Income
Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
SPECIAL EQUITY FUND
OBJECTIVE. Special Equity Fund has an objective of capital appreciation.
INVESTMENT POLICIES. Under normal market conditions, Special Equity Fund invests
at least 65% of its total assets in equity securities. The Fund's policy is to
invest in equity securities which the Adviser believes offer the potential for
greater than average capital appreciation. The Adviser believes that this policy
can best be achieved by investing in the equity securities of companies where
fundamental changes are occurring, are likely to occur, or have occurred and
where, in the opinion of the Adviser, the changes have not been adequately
reflected in the price of the securities and thus are considered by the Adviser
to be undervalued.
Undervalued securities may include securities of companies which (i) have
been unpopular for some time but where, in the Adviser's opinion, recent
developments (such as those listed in the next sentence) suggest the
possibility of improved operating results; (ii) have recently experienced
marked popularity but which, in the opinion of the Adviser, have temporarily
fallen out of favor for reasons that are considered by the Adviser to be
non-recurring or short-term; and (iii) appear to the Adviser to be
undervalued in relation to popular securities of other companies in the same
industry. Typically, but not exclusively, the Adviser will consider investing
in undervalued issues in which it sees the possibility of substantially
improved market price due to increasing demand for an issuer's products or
services, the development of new or improved products or services, the
probability of increased operating efficiencies, the elimination of
unprofitable products or operations, changes in management or management
goals, fundamental changes in the industry in which the issuer operates, new
or increased emphasis on research and development, or possible mergers or
acquisitions.
In selecting securities judged to be undervalued and in investing in
potential "turnaround" situations, the Adviser will be acting on opinions and
exercising judgments which may be contrary to those of the majority of
investors. These opinions and judgments involve the risks of either (i) a
correct judgment by the majority, in which case losses may be incurred or
profits may be limited, or (ii) a long delay before majority recognition of
the accuracy of the Adviser's judgment, in which case capital invested by the
Fund in an individual security or group of securities may be nonproductive
for an extended period.
The Fund also may invest up to 35% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods -- Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
TECHNOLOGY FUND
OBJECTIVE. Technology Fund has an objective of long-term growth of capital.
INVESTMENT POLICIES. Under normal market conditions, Technology Fund invests at
least 80% of its total assets in equity securities. The Fund anticipates
investing in companies which the Adviser believes have, or will develop,
products, processes or services that will provide or will benefit significantly
from technological advances and improvements. The description of the technology
sector is interpreted broadly by the Adviser and may include such products or
services as inexpensive computing power, such as personal computers; improved
methods of communications, such as satellite transmission; or labor saving
machines or instruments, such as computer-aided design equipment. The prime
emphasis of the Fund is to identify those companies positioned, in the Adviser's
opinion, to benefit from technological advances in areas such as semiconductors,
minicomputers and peripheral equipment, scientific instruments, computer
software, communications, and future automation trends in both office and
factory settings.
The Fund also may invest up to 20% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods -- Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts.
For information about these kinds of investments and certain associated
risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 25% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; and (v) engage in the lending of
portfolio securities. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
For temporary defensive purposes during times of unusual market conditions,
the Fund may without limitation hold cash or invest in cash items of the
kinds described under "Special Investment Methods -- Cash Items." The Fund
also may invest not more than 35% of its total assets in cash and cash items
in order to utilize assets awaiting normal investment.
Technology Fund operates as a non-diversified investment company, as defined
in the 1940 Act, but intends to conduct its operations so as to qualify as a
regulated investment company for purposes of the Internal Revenue Code of
1986, as amended. Since a relatively high percentage of the assets of the
Fund may be invested in the securities of a limited number of issuers which
will be in the same or related economic sectors, the Fund's portfolio
securities may be more susceptible to any single economic, technological or
regulatory occurrence than the portfolio securities of diversified investment
companies. In addition, competitive pressures may have a significant effect
on the financial condition of companies in the technology industry. For
example, if technology continues to advance at an accelerated rate, and the
number of companies and product offerings continue to expand, these companies
could become increasingly sensitive to short product cycles and aggressive
pricing.
INTERNATIONAL FUND
OBJECTIVE. International Fund has an objective of long-term growth of capital.
INVESTMENT POLICIES. Under normal market conditions, International Fund invests
at least 65% of its total assets in an internationally diversified portfolio of
equity securities which trade in markets other than the United States. Generally
these securities are issued by companies (i) domiciled in countries other than
the United States, or (ii) that derive at least 50% of either their revenues or
their pre-tax income from activities outside of the United States. The
securities in which the Fund invests include common and preferred stock,
securities (bonds and preferred stock) convertible into common stock, warrants
and securities representing underlying international securities such as American
Depositary Receipts and European Depositary Receipts. The Fund also may hold
securities of other investment companies (which investments are also subject to
the advisory fee) and depositary or custodial receipts representing beneficial
interests in any of the foregoing securities.
The Fund may invest in securities of issuers in, but not limited to,
Argentina, Australia, Austria, Belgium, Canada, Chile, Columbia, Denmark,
Finland, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan,
Korea, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Peru, the
Philippines, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, the
United Kingdom, and Venezuela. Normally, the Fund will invest at least 65% of
its total assets in securities traded in at least three foreign countries,
including the countries listed above. It is possible, although not currently
anticipated, that up to 35% of the Fund's assets could be invested in United
States companies.
In investing the Fund's assets, the Sub-Adviser expects to place primary
emphasis on country selection, followed by selection of industries or sectors
within or across countries and by selection of individual stocks
corresponding to the industries or sectors selected. Investments are expected
to be made primarily in developed markets and larger capitalization
companies. However, the Fund also may invest in emerging markets where
smaller capitalization companies are the norm.
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order
to attempt to reduce risk, purchase put and call options on equity securities
and on stock indices; (iii) write covered call options covering up to 50% of
the equity securities owned by the Fund; (iv) purchase securities on a
when-issued or delayed-delivery basis; (v) engage in the lending of portfolio
securities; (vi) engage in foreign currency transactions; (vii) in order to
attempt to reduce risk, purchase put and call options on foreign currencies;
(viii) write covered call options on foreign currencies owned by the Fund;
and (ix) enter into contracts for the future purchase or delivery of
securities, foreign currencies, and indices, purchase or sell options on any
such futures contracts and engage in related closing transactions. For
information about these investment methods and certain associated risks, see
the related headings under "Special Investment Methods."
Under normal market conditions, it is expected that the Fund will be fully
invested in equity securities and related hedging instruments (except for
short-term investments of cash for liquidity purposes and pending
investment). However, for temporary defensive purposes during times of
unusual market conditions, the Fund may without limitation hold cash or
invest in cash items of the kinds described under "Special Investment Methods
- -- Cash Items."
International Fund is subject to special risks associated with investing in
foreign securities and to declines in net asset value resulting from changes
in exchange rates between the United States dollar and foreign currencies.
These risks are discussed under "Special Investment Methods -- Foreign
Securities" and "-- Foreign Currency Transactions" elsewhere here. Because of
the special risks associated with foreign investing and the Sub-Adviser's
ability to invest substantial portions of the Fund's assets in a small number
of countries, the Fund may be subject to greater volatility than most mutual
funds which invest principally in domestic securities.
RISKS TO CONSIDER
An investment in any of the Funds involves certain risks in addition to those
noted above with respect to particular Funds. These include the following:
EQUITY SECURITIES GENERALLY. Market prices of equity securities generally, and
of particular companies' equity securities, frequently are subject to greater
volatility than prices of fixed income securities. Market prices of equity
securities as a group have dropped dramatically in a short period of time on
several occasions in the past, and they may do so again in the future. Each of
the Funds is subject to the risk of generally adverse equity markets.
SMALLER-CAPITALIZATION COMPANIES. Emerging Growth Fund and Regional Equity Fund
emphasize investments in companies with relatively small market capitalizations,
and the remaining Funds (excluding Equity Index Fund and Asset Allocation Fund)
are permitted to invest in equity securities of such companies. The equity
securities of smaller-capitalization companies frequently have experienced
greater price volatility in the past than those of larger-capitalization
companies, and they may be expected to do so in the future. To the extent that
the Funds invest in smaller-capitalization companies, they are subject to this
risk of greater volatility.
ACTIVE MANAGEMENT. All of the Funds other than Equity Index Fund are actively
managed to a greater or lesser degree by the Adviser or, in the case of
International Fund, the Sub-Adviser. The performance of these Funds therefore
will reflect in part the ability of the Adviser or Sub-Adviser to select
securities which are suited to achieving the Funds' investment objectives. Due
to their active management, these Funds could underperform other mutual funds
with similar investment objectives or the market generally.
OTHER. Investors also should review "Special Investment Methods" for information
concerning risks associated with certain investment techniques which may be
utilized by the Funds.
MANAGEMENT
The Board of Directors of FAIF has the primary responsibility for overseeing
the overall management and electing the officers of FAIF. Subject to the
overall direction and supervision of the Board of Directors, the Adviser acts
as investment adviser for and manages the investment portfolios of FAIF.
INVESTMENT ADVISER
First Bank National Association, 601 Second Avenue South, Minneapolis,
Minnesota 55480, is the Funds' investment adviser. The Adviser has acted as
an investment adviser to FAIF since its inception in 1987 and has acted as
investment adviser to First American Funds, Inc. since 1982. As of December
31, 1994, the Adviser was managing accounts with an aggregate value of over
$23 billion. First Bank System, Inc., 601 Second Avenue South, Minneapolis,
Minnesota 55480, is the holding company for the Adviser.
Each of the Funds other than International Fund has agreed to pay the Adviser
monthly fees calculated on an annual basis equal to 0.70% of its average
daily net assets. International Fund pays the Adviser a monthly fee
calculated on the same basis equal to 1.25% of its average daily net assets,
out of which the Adviser pays the Sub-Adviser's fee. The Adviser may, at its
option, waive any or all of its fees, or reimburse expenses, with respect to
any Fund from time to time. Any such waiver or reimbursement is voluntary and
may be discontinued at any time. The Adviser also may absorb or reimburse
expenses of the Funds from time to time, in its discretion, while retaining
the ability to be reimbursed by the Funds for such amounts prior to the end
of the fiscal year. This practice would have the effect of lowering a Fund's
overall expense ratio and of increasing yield to investors, or the converse,
at the time such amounts are absorbed or reimbursed, as the case may be.
While the advisory fee payable to the Adviser with respect to International
Fund is higher than the advisory fee paid by most mutual funds, the Adviser
believes it is comparable to that paid by many funds having similar
investment objectives and policies.
The Glass-Steagall Act generally prohibits banks from engaging in the
business of underwriting, selling or distributing securities and from being
affiliated with companies principally engaged in those activities. In
addition, administrative and judicial interpretations of the Glass-Steagall
Act prohibit bank holding companies and their bank and nonbank subsidiaries
from organizing, sponsoring or controlling registered open-end investment
companies that are continuously engaged in distributing their shares. Bank
holding companies and their bank and nonbank subsidiaries may serve, however,
as investment advisers to registered investment companies, subject to a
number of terms and conditions.
Although the scope of the prohibitions and limitations imposed by the
Glass-Steagall Act has not been fully defined by the courts or the
appropriate regulatory agencies, the Funds have received an opinion from
their counsel that the Adviser is not prohibited from performing the
investment advisory services described above, and that FBS Investment
Services, Inc. ("ISI"), a wholly owned broker-dealer subsidiary of the
Adviser, is not prohibited from serving as a Participating Institution as
described herein. In the event of changes in federal or state statutes or
regulations or judicial and administrative interpretations or decisions
pertaining to permissible activities of bank holding companies and their bank
and nonbank subsidiaries, the Adviser and ISI might be prohibited from
continuing these arrangements. In that event, it is expected that the Board
of Directors would make other arrangements and that shareholders would not
suffer adverse financial consequences.
SUB-ADVISER TO INTERNATIONAL FUND
Marvin & Palmer Associates, Inc., 1201 North Market Street, Suite 2300,
Wilmington, Delaware 19801, is Sub-Adviser to International Fund under an
agreement with the Adviser (the "Sub-Advisory Agreement"). The Sub-Adviser is
responsible for the investment and reinvestment of International Fund's
assets and the placement of brokerage transactions in connection therewith.
For its services under the Sub-Advisory Agreement, the Sub-Adviser is paid a
monthly fee by the Adviser calculated on an annual basis equal to 0.75% of
the first $100 million of International Fund's average daily net assets,
0.70% of the second $100 million of International Fund's average daily net
assets, 0.65% of the third $100 million of International Fund's average daily
net assets, and 0.60% of International Fund's average daily net assets in
excess of $300 million.
The Sub-Adviser, a privately held company, was founded in 1986 by David F.
Marvin and Stanley Palmer. The stock of the Sub-Adviser is owned by Mr.
Marvin, Mr. Palmer and 23 other holders. The Sub-Adviser is engaged in the
management of global, non-United States and emerging markets equity
portfolios for institutional accounts. Although the Sub-Adviser has not
previously acted as adviser or sub-adviser for a registered investment
company, at September 30, 1994, the Sub-Adviser managed a total of $2.8
billion in investments for 47 institutional investors.
PORTFOLIO MANAGERS
JAMES DOAK is the portfolio manager for Stock Fund. Jim joined the Adviser in
1982 after serving for two years as vice president of INA Capital Advisors
and ten years as Vice President of Loomis-Sayles & Co. He has managed assets
for individual and institutional clients, specializing in equity investments,
and has served as the analyst and portfolio manager for Stock Fund since its
inception in December 1987. Jim received his bachelor's degree from Brown
University and his master's degree in business administration from the
Wharton School of Business. He is a Chartered Financial Analyst.
JAMES S. ROVNER is the portfolio manager for Equity Index Fund and Balanced
Fund. Jim joined the Adviser in 1986 and is a member of its Equity Group.
This group of analysts together selects equity issues to be included in
certain FAIF equity and balanced funds. Jim has managed assets for
institutional and individual clients for over 15 years, specializing in
equity and balanced investment strategies. He has served as portfolio manager
and analyst for Equity Index Fund and Balanced Fund since their inceptions in
December 1992. Jim received his bachelor's degree and his master's degree in
business administration from the University of Wisconsin. He is a Chartered
Financial Analyst.
JOHN G. ADAMS is portfolio co-manager for Limited Volatility Stock Fund and
Vice President/Director of Research for the Colorado Trust Investment Group.
John joined the Adviser in 1981, after serving for two years as a securities
analyst for Piper Jaffray Incorporated and for seven years as securities
analyst and portfolio manager for Northwestern National Bank's Trust
Investment division. John received his bachelor's degree from the University
of Minnesota. He is a Chartered Financial Analyst.
MICHAEL W. KELLOGG is portfolio co-manager for Limited Volatility Stock Fund.
He is also Senior Managing Director of the Adviser and Executive Vice
President of the Trust Investment Group in Colorado. Michael joined the
Adviser in 1986 after serving as a partner in an Omaha investment advisory
firm and a portfolio manager for Norwest Capital Management. He received his
bachelor's degree from Hastings College.
CORI B. JOHNSON is the portfolio manager for Asset Allocation Fund. Cori has
been managing assets using quantitative analysis techniques since 1992. She
joined the Adviser in 1991 as a securities analyst. Cori received her
bachelor's degree from Concordia College and her master's degree in business
administration from the University of Minnesota. She is a Chartered Financial
Analyst.
GERALD C. BREN is portfolio co-manager for Equity Income Fund, Diversified
Growth Fund and Technology Fund and is the portfolio manager for Emerging
Growth Fund. Gerald joined the Adviser in 1972 as an investment analyst and
has been the Adviser's Manager of Equity Investments since 1986. Gerald
received his master's degree in business administration from the University
of Chicago in 1972 and his Chartered Financial Analyst certification in 1977.
He is a Chartered Financial Analyst.
ALBIN S. DUBIAK is portfolio co-manager for Equity Income Fund, Diversified
Growth Fund and Emerging Growth Fund. Al began his investment career as a
security trader with The First National Bank of Chicago in 1963 before
joining the Adviser as an investment analyst in 1969. Since 1988, he has been
the Director of Investment Research and Fund Management. Al received his
bachelor's degree from Indiana University in 1962 and his master's degree in
business administration from the University of Arizona in 1969.
RICHARD J. RINKOFF is the portfolio manager for Regional Equity Fund. Rick
joined the Adviser in 1977 after serving as an investment officer for two
years for Pittsburgh National Bank. Since then, he has managed assets for
individuals and institutional clients of the Adviser, specializing in
managing investments in regional equities. He has served as portfolio manager
for the regional fund management style since 1981. Rick received his
bachelor's degree in mathematics and his master's degree in business from
Carnegie-Mellon University. He is a Chartered Financial Analyst.
LAWRENCE C. SMITH is the portfolio manager for Special Equity Fund. Larry
joined the Adviser in 1973 after serving as a securities analyst for three
years at Paine Webber and one year at Royal Globe Insurance. He has over 25
years in the investment business and has managed portfolios in this style for
over 10 years. Larry received his bachelor's degree from Bowdoin College and
his master's degree in business administration from Columbia Business School.
ROLAND P. WHITCOMB is portfolio co-manager for Technology Fund. Roland joined
the Adviser in 1986 after serving as an account executive with Smith Barney &
Co. since 1979. He received his bachelor's degree from the University of
Chicago and is a Chartered Financial Analyst.
RICHARD W. JENSEN of the Adviser supervises and monitors the performance of
the Sub-Adviser with respect to International Fund. He is Senior Managing
Director and a portfolio manager with the Adviser, having joined it in 1967.
Prior to that time he was employed by Merrill Lynch, Pierce, Fenner & Smith
and Irving Trust Company. He received his bachelor's degree from the
University of Minnesota and is a Chartered Financial Analyst.
A committee comprised of the following five individuals shares the management
of International Fund on behalf of the Sub-Adviser:
DAVID F. MARVIN is Chairman of the Sub-Adviser and founded the firm together
with Mr. Palmer in 1986. Before founding the Sub-Adviser, Mr. Marvin was Vice
President in charge of DuPont Corporation's $10 billion internally-managed
pension fund. Prior to that Mr. Marvin was Associate Portfolio Manager, and
then Head Portfolio Manager, for Investors Diversified Services' IDS Stock
Fund. Mr. Marvin started in the investment business in 1965 as a securities
analyst for Chicago Title & Trust. He received his bachelor's degree from the
University of Illinois and his master's degree in business administration
from Northwestern University. He is a Chartered Financial Analyst and a
member of the Financial Analysts Federation.
STANLEY PALMER is President of the Sub-Adviser and co-founder of the firm.
Mr. Palmer was Equity Portfolio Manager for DuPont Corporation from 1978
through 1986, an analyst and portfolio manager at Investors Diversified
Services from 1971 through 1978, and an analyst at Harris Trust & Savings
Bank from 1964 through 1971. He received his bachelor's degree from Gustavus
Adolphus College and his master's degree in business administration from the
University of Iowa. He is a Chartered Financial Analyst and a member of the
Financial Analysts Federation.
TERRY B. MASON is a Vice President and Portfolio Manager of the Sub-Adviser.
Before joining the Sub-Adviser, Mr. Mason was employed for 14 years by DuPont
Corporation, the last five as international equity analyst and international
trader. He received his bachelor's degree from Glassboro State College and
his master's degree in business administration from Widener University.
JAY F. MIDDLETON is a portfolio manager for the Sub-Adviser and joined the
firm in 1989. He received his bachelor's degree from Wesleyan University.
TODD D. MARVIN is a portfolio manager for the Sub-Adviser and joined the firm
in 1991. Before joining the Sub-Adviser, Mr. Marvin was employed by
Oppenheimer & Company as an analyst in investment banking. Mr. Marvin
received his bachelor's degree from Wesleyan University.
CUSTODIAN
The custodian of the Funds' assets is First Trust National Association (the
"Custodian"), First Trust Center, 180 East Fifth Street, St. Paul, Minnesota
55101. The Custodian is a subsidiary of First Bank System, Inc., which also
controls the Adviser.
As compensation for its services to Stock Fund, Equity Index Fund, Balanced
Fund, Asset Allocation Fund, Regional Equity Fund, and Special Equity Fund,
the Custodian is paid the following fees: (i) an annual administration fee of
$750 per Fund; (ii) an issue held fee, computed as of the end of each month,
at the annual rate of $30 per securities issue held by each Fund; (iii)
transaction fees, consisting of (a) a securities buy/sell/maturity fee of $15
per each such transaction, and (b) a payment received fee of $12 for each
principal pay down payment received on collateralized mortgage pass-through
instruments; (iv) a wire transfer fee of $10 per transaction; (v) a cash
management fee, for "sweeping" cash into overnight investments, at an annual
rate of 0.25% of the amounts so invested; and (vi) a remittance fee, for
payment of each Fund's expenses, of $3.50 per each check drawn for such
remittances. The Custodian is paid monthly fees equal to 0.03% of the average
daily net assets of Limited Volatility Stock Fund, Equity Income Fund,
Diversified Growth Fund, Emerging Growth Fund, and Technology Fund and 0.25%
of the average daily net assets of International Fund. Sub-custodian fees
with respect to International Fund are paid by the Custodian out of this
amount. In addition, the Custodian is reimbursed for its out-of-pocket
expenses incurred while providing its services to the Funds.
Rules adopted under the 1940 Act permit International Fund to maintain its
securities and cash in the custody of certain eligible foreign banks and
depositories. International Fund's portfolio of non-United States securities
are held by sub-custodians which are approved by the directors of FAIF in
accordance with these rules. This determination is made pursuant to these
rules following a consideration of a number of factors including, but not
limited to, the reliability and financial stability of the institution; the
ability of the institution to perform custodian services for International
Fund; the reputation of the institution in its national market; the political
and economic stability of the country in which the institution is located;
and the risks of potential nationalization or expropriation of International
Fund's assets.
ADMINISTRATOR
The administrator for the Funds is SEI Financial Management Corporation (the
"Administrator"), 680 East Swedesford Road, Wayne, Pennsylvania 19087. The
Administrator, a wholly-owned subsidiary of SEI Corporation, provides the
Funds with certain administrative services necessary to operate the Funds.
These services include shareholder servicing and certain accounting and other
services. The Administrator provides these services for a fee calculated at
an annual rate of 0.12% of each Fund's average daily net assets, subject to a
minimum administrative fee during each fiscal year of $50,000 per Fund;
provided, that to the extent that the aggregate net assets of all First
American funds exceed $8 billion, the percentage stated above is reduced to
0.105%. From time to time, the Administrator may voluntarily waive its fees
or reimburse expenses with respect to any of the Funds. Any such waivers or
reimbursements may be made at the Administrator's discretion and may be
terminated at any time.
TRANSFER AGENT
Supervised Service Company (the "Transfer Agent") serves as the transfer
agent and dividend disbursing agent for the Funds. The address of the
Transfer Agent is 811 Main Street, Kansas City, Missouri 64105. The Transfer
Agent is not affiliated with the Distributor, the Administrator or the
Adviser.
DISTRIBUTOR
SEI Financial Services Company is the principal distributor for shares of the
Funds and of the other FAIF Funds. The Distributor is a Pennsylvania
corporation and is the principal distributor for a number of investment
companies. The Distributor is a wholly-owned subsidiary of SEI Corporation
and is located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. The
Distributor is not affiliated with the Adviser, First Bank System, Inc., the
Custodian or their respective affiliates.
Shares of the Funds are distributed through the Distributor and securities
firms, financial institutions (including, without limitation, banks) and
other industry professionals (the "Participating Institutions") which enter
into sales agreements with the Distributor to perform share distribution or
shareholder support services.
FAIF has adopted a Plan of Distribution for the Class A Shares pursuant to
Rule 12b-1 under the 1940 Act (the "Class A Distribution Plan"). The Class A
Distribution Plan authorizes the Distributor to retain the sales charge paid
upon purchase of Class A Shares, except that portion which is reallowed to
Participating Institutions. See "Investing in the Funds -- Alternative Sales
Charge Options." Under the Class A Distribution Plan, each Fund also pays the
Distributor a distribution fee monthly at an annual rate of 0.25% of the
Fund's Class A Shares' average daily net assets, which fee may be used by the
Distributor to provide compensation for sales support and distribution
activities with respect to Class A Shares of the Funds. From time to time,
the Distributor may voluntarily waive its distribution fees with respect to
the Class A Shares of any of the Funds. Any such waivers may be made at the
Distributor's discretion and may be terminated at any time.
Under another distribution plan (the "Class B Distribution Plan") adopted in
accordance with Rule 12b-1 under the 1940 Act, the Funds may pay to the
Distributor a sales support fee at an annual rate of up to 0.75% of the
average daily net assets of the Class B Shares of the Funds, which fee may be
used by the Distributor to provide compensation for sales support and
distribution activities with respect to Class B Shares of the Funds. This fee
is calculated and paid each month based on the average daily net assets for
that month. In addition to this fee, the Distributor may be paid a
shareholder servicing fee of 0.25% of the average daily net assets of the
Class B Shares pursuant to a service plan (the "Class B Service Plan"), which
fee may be used by the Distributor to provide compensation for personal,
ongoing servicing and/or maintenance of shareholder accounts with respect to
Class B Shares of the Funds. Although Class B Shares are sold without an
initial sales charge, the Distributor pays a total of 4.25% of the amount
invested (including a prepaid service fee of 0.25% of the amount invested) to
dealers who sell Class B Shares (excluding exchanges from other Class B
Shares in the First American family). The service fee payable under the Class
B Service Plan is prepaid for the first year as described above.
The Class A and Class B Distribution Plans recognize that the Adviser, the
Administrator, the Distributor, and any Participating Institution may in
their discretion use their own assets to pay for certain additional costs of
distributing Fund shares. Any arrangement to pay such additional costs may be
commenced or discontinued by any of these persons at any time. In addition,
while there is no sales charge on purchases of Class A Shares of $1 million
and more, the Adviser may pay amounts to broker-dealers from its own assets
with respect to such sales. ISI, a subsidiary of the Adviser, is a
Participating Institution.
INVESTING IN THE FUNDS
SHARE PURCHASES
Shares of the Funds are sold at their net asset value, next determined after
an order is received, plus any applicable sales charge, on days on which the
New York Stock Exchange is open for business. Shares may be purchased as
described below. The Funds reserve the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. Shares may be purchased through a financial
institution which has a sales agreement with the Distributor. An investor may
call his or her financial institution to place an order. Purchase orders must be
received by the financial institution by the time specified by the institution
to be assured same day processing, and purchase orders must be transmitted to
and received by the Funds by 3:00 p.m. Central time in order for shares to be
purchased at that day's price. It is the financial institution's responsibility
to transmit orders promptly.
BY MAIL. An investor may place an order to purchase shares of the Funds directly
through the Transfer Agent. Orders by mail are considered received after payment
by check is converted by the Funds into federal funds. In order to purchase
shares by mail, an investor must:
* complete and sign the new account form;
* enclose a check made payable to (Fund name); and
* mail both to Supervised Service Company, P.O. Box 419382, Kansas City,
Missouri 64141-6382.
After an account is established, an investor can purchase shares by mail by
enclosing a check and mailing it to Supervised Service Company at the above
address.
BY WIRE. To purchase shares of a Fund by wire, call (800) 637-2548 before 3:00
p.m. Central time to place an order. All information needed will be taken over
the telephone, and the order will be considered received when the Custodian
receives payment by wire. Federal funds should be wired as follows: First Bank
National Association, Minneapolis, Minnesota, ABA Number 091000022; For
Credit to: Supervised Service Company: Account Number 6023458026; For Further
Credit To: (Investor Name and Fund Name). Shares cannot be purchased by
Federal Reserve wire on days on which the New York Stock Exchange is closed
and on federal holidays upon which wire transfers are restricted.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment for each Fund is $1,000 unless the investment
is in a retirement plan, in which case the minimum investment is $250. The
minimum subsequent investment is $100. The Funds reserve the right to waive
the minimum investment requirement for employees of First Bank National
Association, First Trust National Association and First Bank System, Inc. and
their respective affiliates.
ALTERNATIVE SALES CHARGE OPTIONS
THE TWO ALTERNATIVES: OVERVIEW. An investor may purchase shares of a Fund at a
price equal to its net asset value per share plus a sales charge which, at the
investor's election, may be imposed either (i) at the time of the purchase (the
Class A "initial sales charge alternative"), or (ii) on a contingent deferred
basis (the Class B "deferred sales charge alternative"). Each of Class A and
Class B represents a Fund's interest in its portfolio of investments. The
classes have the same rights and are identical in all respects except that (i)
Class B Shares bear the expenses of the contingent deferred sales charge
arrangement and distribution and service fees resulting from such sales
arrangement; (ii) each class has exclusive voting rights with respect to
approvals of any Rule 12b-1 distribution plan related to that specific class
(although Class B shareholders may vote on any distribution fees imposed on
Class A Shares as long as Class B Shares convert into Class A Shares); (iii)
only Class B Shares carry a conversion feature; and (iv) each class has
different exchange privileges. Sales personnel of financial institutions
distributing the Funds' shares, and other persons entitled to receive
compensation for selling shares, may receive differing compensation for selling
Class A and Class B Shares.
These alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial to that investor. The
amount of a purchase, the length of time an investor expects to hold the
shares, and whether the investor wishes to receive dividends in cash or in
additional shares, will all be factors in determining which sales charge
option is best for a particular investor. An investor should consider
whether, over the time he or she expects to maintain the investment, the
accumulated sales charges on Class B Shares prior to conversion would be less
than the initial sales charge on Class A Shares, and to what extent the
differential may be offset by the expected higher yield of Class A Shares.
Class A Shares will normally be more beneficial to an investor if he or she
qualifies for reduced sales charges as described below. Accordingly, orders
for Class B Shares for $250,000 or more ordinarily will be treated as orders
for Class A Shares or declined.
The Directors of FAIF have determined that no conflict of interest currently
exists between the Class A and Class B Shares. On an ongoing basis, the
Directors, pursuant to their fiduciary duties under the 1940 Act and state
laws, will seek to ensure that no such conflict arises.
CLASS A SHARES.
WHAT CLASS A SHARES COST. Class A Shares of each Fund are offered on a
continuous basis at their next determined offering price, which is net asset
value, plus a sales charge as set forth below:
EACH FUND:
<TABLE>
<CAPTION>
SALES CHARGE MAXIMUM AMOUNT
AS PERCENTAGE SALES CHARGE AS OF SALES
OF OFFERING PERCENTAGE OF CHARGE REALLOWED
PRICE NET ASSET VALUE TO PARTICIPATING INSTITUTIONS
<S> <C> <C> <C>
Less than $50,000 4.50% 4.75% 4.05%
$50,000 but less than $100,000 4.00% 4.17% 3.60%
$100,000 but less than $250,000 3.50% 3.63% 3.15%
$250,000 but less than $500,000 2.75% 2.83% 2.47%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.80%
$1,000,000 and over 0.00% 0.00% 0.00%
</TABLE>
There is no initial sales charge on purchases of Class A Shares of $1 million
or more. However, Participating Institutions will receive a commission of
1.00% on such sales. Redemptions of Class A Shares purchased at net asset
value within 24 months of purchase will be subject to a contingent deferred
sales charge of 1.00%. However, Class A Shares that are redeemed will not be
subject to this contingent deferred sales charge to the extent that the value
of the shares represents capital appreciation of Fund assets or reinvestment
of dividends or capital gain distributions.
Net asset value is determined at 3:00 p.m. Central time Monday through Friday
except on (i) days on which there are not sufficient changes in the value of
a Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; and (iii) on the following federal
holidays: New Year's Day, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. In addition, net asset value
will not be calculated on Good Friday.
DEALER CONCESSION. A dealer will normally receive up to 90% of the applicable
sales charge. Any portion of the sales charge which is not paid to a dealer will
be retained by the Distributor. In addition, the Distributor may, from time to
time in its sole discretion, institute one or more promotional incentive
programs which will be paid by the Distributor from the sales charge it receives
or from any other source available to it. Under any such program, the
Distributor will provide promotional incentives, in the form of cash or other
compensation including merchandise, airline vouchers, trips and vacation
packages, to all dealers selling shares of the Funds. Promotional incentives of
these kinds will be offered uniformly to all dealers and predicated upon the
amount of shares of the Funds sold by the dealer. Whenever 90% or more of a
sales charge is paid to a dealer, that dealer may be deemed to be an underwriter
as defined in the Securities Act of 1933.
The sales charge for shares sold other than through registered broker/dealers
will be retained by the Distributor. The Distributor may pay fees to
financial institutions out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the institution's customers in
connection with the initiation of customer accounts and purchases of Fund
shares.
REDUCING THE CLASS A SALES CHARGE. The sales charge can be reduced on the
purchase of Class A Shares through (i) quantity discounts and accumulated
purchases, or (ii) signing a 13-month letter of intent:
* Quantity Discounts and Accumulated Purchases: As shown in the table above,
larger purchases of Class A Shares reduce the percentage sales charge paid.
Each Fund will combine purchases made on the same day by an investor, the
investor's spouse, and the investor's children under age 21 when it
calculates the sales charge. In addition, the sales charge, if applicable,
is reduced for purchases made at one time by a trustee or fiduciary for a
single trust estate or a single fiduciary account.
The sales charge discount applies to the total current market value of any
Fund, plus the current market value of any other FAIF Fund and any other
mutual funds having a sales charge and distributed as part of the First
American family of funds. Prior purchases and concurrent purchases of Class
A Shares of any FAIF Fund will be considered in determining the sales
charge reduction. In order for an investor to receive the sales charge
reduction on Class A Shares, the Transfer Agent must be notified by the
investor in writing or by his or her financial institution at the time the
purchase is made that Fund shares are already owned or that purchases are
being combined.
* Letter of Intent: If an investor intends to purchase at least $50,000 of
Class A Shares in a Fund and other FAIF Funds over the next 13 months, the
sales charge may be reduced by signing a letter of intent to that effect.
This letter of intent includes a provision for a sales charge adjustment
depending on the amount actually purchased within the 13-month period and a
provision for the Custodian to hold a percentage equal to the particular
FAIF Fund's maximum sales charge rate of the total amount intended to be
purchased in escrow (in shares) for all FAIF Funds until the purchase is
completed. The amount held in escrow for all FAIF Funds will be applied to
the investor's account at the end of the 13-month period after deduction of
the sales load applicable to the dollar value of shares actually purchased.
In this event, an appropriate number of escrowed shares may be redeemed in
order to realize the difference in the sales charge.
A letter of intent will not obligate the investor to purchase shares, but
if he or she does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. This letter
may be dated as of a prior date to include any purchases made within the
past 90 days.
SALES OF CLASS A SHARES AT NET ASSET VALUE. Purchases of a Fund's Class A Shares
by the Adviser or any of its affiliates, or any of their or FAIF's officers,
directors, employees, retirees, sales representatives, partners and full-time
employees of FAIF's general counsel, and members of their immediate families
(i.e., parent, child, spouse, sibling, step or adopted relationships, and UTMA
accounts naming qualifying persons), may be made at net asset value without a
sales charge.
If Class A Shares of a Fund have been redeemed, the shareholder has a
one-time right, within 30 days, to reinvest the redemption proceeds in Class
A Shares of any FAIF Fund at the next-determined net asset value without any
sales charge. The Transfer Agent must be notified by the shareholder in
writing or by his or her financial institution of the reinvestment in order
to eliminate a sales charge. If the shareholder redeems his or her shares of
a Fund, there may be tax consequences.
In addition, purchases of Class A Shares of a Fund that are funded by
proceeds received upon the redemption (within 60 days of the purchase of Fund
shares) of shares of any unrelated open-end investment company that charges a
sales load may be made at net asset value. To make such a purchase at net
asset value, an investor or the investor's broker must, at the time of
purchase, submit a written request to the Transfer Agent that the purchase be
processed at net asset value pursuant to this privilege, accompanied by a
photocopy of the confirmation (or similar evidence) showing the redemption
from the unrelated fund. The redemption of the shares of the non-related fund
is, for federal income tax purposes, a sale upon which a gain or loss may be
realized.
CLASS B SHARES.
CONTINGENT DEFERRED SALES CHARGE. Class B Shares are sold at net asset value
without any initial sales charge. If an investor redeems Class B Shares within
eight years of purchase, he or she will pay a contingent deferred sales charge
at the rates set forth below. This charge is assessed on an amount equal to the
lesser of the then-current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price or on shares derived from reinvestment of
dividends or capital gain distributions.
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF DOLLAR
AMOUNT SUBJECT TO
YEAR SINCE PURCHASE CHARGE
First 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh None
Eighth None
In determining whether a particular redemption is subject to a contingent
deferred sales charge, it is assumed that the redemption is first of any
Class A Shares in the shareholder's Fund account; second, of any Class B
Shares held for more than eight years and Class B Shares acquired pursuant to
reinvestment of dividends or other distributions; and third, of Class B
Shares held longest during the eight-year period. This method should result
in the lowest possible sales charge.
The contingent deferred sales charge is waived on redemption of Class B
Shares (i) within one year following the death or disability (as defined in
the Internal Revenue Code) of a shareholder, and (ii) to the extent that the
redemption represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who has attained
the age of 70 1/2 . A shareholder or his or her representative must notify
the Transfer Agent prior to the time of redemption if such circumstances
exist and the shareholder is eligible for this waiver.
CONVERSION FEATURE. At the end of the period ending eight years after the
beginning of the month in which the shares were issued, Class B Shares will
automatically convert to Class A Shares and will no longer be subject to the
Class B distribution and service fees. This conversion will be on the basis of
the relative net asset values of the two classes.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment
on a regular basis in a minimum amount of $100. Under this program, funds may
be automatically withdrawn periodically from the shareholder's checking
account and invested in Fund shares at the net asset value next determined
after an order is received, plus any applicable sales charge. A shareholder
may apply for participation in this program through his or her financial
institution or call (800) 637-2548.
EXCHANGING SECURITIES FOR FUND SHARES
A Fund may accept securities in exchange for Fund shares. A Fund will allow
such exchanges only upon the prior approval by the Fund and a determination
by the Fund and the Adviser that the securities to be exchanged are
acceptable. Securities accepted by a Fund will be valued in the same manner
that a Fund values its assets. The basis of the exchange will depend upon the
net asset value of Fund shares on the day the securities are valued.
CERTIFICATES AND CONFIRMATIONS
The Transfer Agent maintains a share account for each shareholder. Share
certificates will not be issued by the Funds.
Confirmations of each purchase and redemption are sent to each shareholder.
In addition, monthly confirmations are sent to report all transactions and
dividends paid during that month for the Funds.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid monthly with respect to Stock Fund, Equity
Index Fund, Balanced Fund, Limited Volatility Stock Fund, Asset Allocation
Fund, Equity Income Fund, Diversified Growth Fund and Special Equity Fund, to
all shareholders of record on the record date. Dividends are declared paid
quarterly with respect to Emerging Growth Fund, Regional Equity Fund and
Technology Fund, and annually with respect to International Fund.
Distributions of any net realized long-term capital gains will be made at
least once every 12 months. Dividends and distributions are automatically
reinvested in additional shares of the Fund paying the dividend on payment
dates at the ex-dividend date net asset value without a sales charge, unless
shareholders request cash payments on the new account form or by writing to
the Fund.
All shareholders on the record date are entitled to the dividend. If shares
are purchased before a record date for a dividend or a distribution of
capital gains, a shareholder will pay the full price for the shares and will
receive some portion of the purchase price back as a taxable dividend or
distribution (to the extent, if any, that the dividend or distribution is
otherwise taxable to holders of Fund shares). If shares are redeemed or
exchanged before the record date for a dividend or distribution or are
purchased after the record date, those shares are not entitled to the
dividend or distribution.
The amount of dividends payable on Class A and Class B Shares generally will
be less than the dividends payable on Class C Shares because of the
distribution expenses charged to Class A and Class B Shares. The amount of
dividends payable on Class A Shares generally will be more than the dividends
payable on the Class B Shares because of the distribution and service fees
paid by Class B Shares.
EXCHANGE PRIVILEGE
Shareholders may exchange Class A or Class B Shares of a Fund for currently
available Class A or Class B Shares, respectively, of the other FAIF Funds or
of other funds in the First American family. Class A Shares of the Funds,
whether acquired by direct purchase, reinvestment of dividends on such
shares, or otherwise, may be exchanged for Class A Shares of other funds
without the payment of any sales charge (i.e., at net asset value). Exchanges
of shares among the FAIF Funds must meet any applicable minimum investment of
the fund for which shares are being exchanged.
For purposes of calculating the Class B Shares' eight-year conversion period
or contingent deferred sales charges payable upon redemption, the holding
period of Class B Shares of the "old" fund and the holding period of Class B
Shares of the "new" fund are aggregated.
The ability to exchange shares of the Funds does not constitute an offering
or recommendation of shares of one fund by another fund. This privilege is
available to shareholders resident in any state in which the fund shares
being acquired may be sold. An investor who is considering acquiring shares
in another First American fund pursuant to the exchange privilege should
obtain and carefully read a prospectus of the fund to be acquired. Exchanges
may be accomplished by a written request, or by telephone if a preauthorized
exchange authorization is on file with the Transfer Agent, shareholder
servicing agent, or financial institution.
Written exchange requests must be signed exactly as shown on the
authorization form, and the signatures may be required to be guaranteed as
for a redemption of shares by an entity described below under "Redeeming
Shares -- Directly From the Funds -- Signatures." Neither the Funds, the
Distributor, the Transfer Agent, any shareholder servicing agent, or any
financial institution will be responsible for further verification of the
authenticity of the exchange instructions.
Telephone exchange instructions made by an investor may be carried out only
if a telephone authorization form completed by the investor is on file with
the Transfer Agent, shareholder servicing agent, or financial institution.
Shares may be exchanged between two FAIF Funds by telephone only if both FAIF
Funds have identical shareholder registrations.
Telephone exchange instructions may be recorded and will be binding upon the
shareholder. Telephone instructions must be received by the Transfer Agent
before 3:00 p.m. Central time, or by a shareholder's shareholder servicing
agent or financial institution by the time specified by it, in order for
shares to be exchanged the same day. Neither the Transfer Agent nor any Fund
will be responsible for the authenticity of exchange instructions received by
telephone if it reasonably believes those instructions to be genuine. The
Funds and the Transfer Agent will each employ reasonable procedures to
confirm that telephone instructions are genuine, and they may be liable for
losses resulting from unauthorized or fraudulent telephone instructions if
they do not employ these procedures.
Shareholders of the Funds may have difficulty in making exchanges by
telephone through brokers and other financial institutions during times of
drastic economic or market changes. If a shareholder cannot contact his or
her broker or financial institution by telephone, it is recommended that an
exchange request be made in writing and sent by overnight mail to Supervised
Service Company, 811 Main Street, Kansas City, Missouri 64105.
Shareholders who become eligible to purchase Class C Shares may exchange
Class A Shares for Class C Shares. An example of such an exchange would be a
situation in which an individual holder of Class A Shares subsequently opens
a custody or agency account with a financial institution which invests in
Class C Shares.
The terms of any exchange privilege may be modified or terminated by the
Funds at any time. There are currently no additional fees or charges for the
exchange service. The Funds do not contemplate establishing such fees or
charges, but they reserve the right to do so. Shareholders will be notified
of any modification or termination of the exchange privilege and of the
imposition of any additional fees or changes.
REDEEMING SHARES
Each Fund redeems shares at their net asset value next determined after the
Transfer Agent receives the redemption request, reduced by any applicable
contingent deferred sales charge. Redemptions will be made on days on which
the Fund computes its net asset value. Redemption requests can be made as
described below and must be received in proper form.
BY TELEPHONE
A shareholder may redeem shares of a Fund by calling his or her financial
institution to request the redemption. Shares will be redeemed at the net
asset value next determined after the Fund receives the redemption request
from the financial institution. Redemption requests must be received by the
financial institution by the time specified by the institution in order for
shares to be redeemed at that day's net asset value, and redemption requests
must be transmitted to and received by the Funds by 3:00 p.m. Central time in
order for shares to be redeemed at that day's net asset value. Pursuant to
instructions received from the financial institution, redemptions will be
made by check or by wire transfer. It is the financial institution's
responsibility to transmit redemption requests promptly.
Shareholders who did not purchase their shares of a Fund through a financial
institution may redeem their shares by telephoning (800) 637-2548. At the
shareholder's request, redemption proceeds will be paid by check mailed to
the shareholder's address of record or wire transferred to the shareholder's
account at a domestic commercial bank that is a member of the Federal Reserve
System, normally within one business day, but in no event more than seven
days after the request. The minimum amount for a wire transfer is $1,000. If
at any time the Funds determine it necessary to terminate or modify this
method of redemption, shareholders will be promptly notified.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming shares by telephone. If this should occur,
another method of redemption should be considered. Neither the Transfer Agent
nor any Fund will be responsible for the authenticity of redemption
instructions received by telephone if it reasonably believes those
instructions to be genuine. The Funds and the Transfer Agent will each employ
reasonable procedures to confirm that telephone instructions are genuine, and
they may be liable for losses resulting from unauthorized or fraudulent
telephone instructions if they do not employ these procedures. These
procedures may include taping of telephone conversations.
BY MAIL
Any shareholder may redeem Fund shares by sending a written request to the
Transfer Agent, shareholder servicing agent, or financial institution. The
written request should include the shareholder's name, the Fund name, the
account number, and the share or dollar amount requested to be redeemed, and
should be signed exactly as the shares are registered. Shareholders should
call the Fund, shareholder servicing agent or financial institution for
assistance in redeeming by mail. A check for redemption proceeds normally is
mailed within one business day, but in no event more than seven days, after
receipt of a proper written redemption request.
Shareholders requesting a redemption of $5,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record, must have
signatures on written redemption requests guaranteed by:
* a trust company or commercial bank the deposits of which are insured by the
Bank Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
* a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges or of the National Association of Securities Dealers;
* a savings bank or savings and loan association the deposits of which are
insured by the Savings Association Insurance Fund, which is administered by
the FDIC; or
* any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantees to institutions that are
members of a signature guarantee program. The Funds and the Transfer Agent
reserve the right to amend these standards at any time without notice.
BY SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders whose account value is at least $5,000 may elect to participate
in the Systematic Withdrawal Program. Under this program, Fund shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. A shareholder may apply to participate in this program
through his or her financial institution. It is generally not in a
shareholder's best interest to participate in the Systematic Withdrawal
Program at the same time that the shareholder is purchasing additional shares
if a sales charge must be paid in connection with such purchases. Because
automatic withdrawals with respect to Class B Shares are subject to the
contingent deferred sales charge, it may not be in the best interest of a
Class B shareholder to participate in the Systematic Withdrawal Program.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares are purchased by check or with funds transmitted through the
Automated Clearing House, the proceeds of redemptions of those shares are not
available until the Transfer Agent is reasonably certain that the purchase
payment has cleared, which could take up to ten calendar days from the
purchase date.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, a Fund may
redeem shares in any account, except retirement plans, and pay the proceeds,
less any applicable contingent deferred sales charge, to the shareholder if
the account balance falls below the required minimum value of $500. Shares
will not be redeemed in this manner, however, if the balance falls below $500
because of changes in a Fund's net asset value. Before shares are redeemed to
close an account, the shareholder will be notified in writing and allowed 60
days to purchase additional shares to meet the minimum account requirement.
DETERMINING THE PRICE OF SHARES
Class A Shares of the Funds are sold at net asset value plus a sales charge,
while Class B Shares are sold without a front-end sales charge. Shares are
redeemed at net asset value less any applicable contingent deferred sales
charge. See "Investing in the Funds -- Alternative Sales Charge Options."
The net asset value per share is determined as of the earlier of the close of
the New York Stock Exchange or 3:00 p.m. Central time on each day the New
York Stock Exchange is open for business, provided that net asset value need
not be determined on days when no Fund shares are tendered for redemption and
no order for that Fund's shares is received and on days on which changes in
the value of portfolio securities will not materially affect the current net
asset value of the Fund's shares. The price per share for purchases or
redemptions is such value next computed after the Transfer Agent receives the
purchase order or redemption request.
It is the responsibility of Participating Institutions promptly to forward
purchase and redemption orders to the Transfer Agent. In the case of
redemptions and repurchases of shares owned by corporations, trusts or
estates, the Transfer Agent or Fund may require additional documents to
evidence appropriate authority in order to effect the redemption, and the
applicable price will be that next determined following the receipt of the
required documentation.
DETERMINING NET ASSET VALUE
The net asset value per share for each of the Funds is determined by dividing
the value of the securities owned by the Fund plus any cash and other assets
(including interest accrued and dividends declared but not collected), less
all liabilities, by the number of Fund shares outstanding. For the purpose of
determining the aggregate net assets of the Funds, cash and receivables will
be valued at their face amounts. Interest will be recorded as accrued and
dividends will be recorded on the ex-dividend date. Securities traded on a
national securities exchange or on the NASDAQ National Market System are
valued at the last reported sale price that day. Securities traded on a
national securities exchange or on the NASDAQ National Market System for
which there were no sales on that day, and securities traded on other
over-the-counter markets for which market quotations are readily available,
are valued at the mean between the bid and asked prices.
Portfolio securities underlying actively traded options are valued at their
market price as determined above. The current market value of any exchange
traded option held or written by a Fund is its last sales price on the
exchange prior to the time when assets are valued, unless the bid price is
higher or the asked price is lower, in which event the bid or asked price is
used. In the absence of any sales that day, options will be valued at the
mean between the current closing bid and asked prices.
Short-term securities with maturities of less than 60 days when acquired, or
which subsequently are within 60 days of maturity, are valued at amortized
cost. Securities and other assets for which market prices are not readily
available are valued at fair value as determined in good faith by or under
the direction of the Board of Directors. Subject to the use of reliable
market quotations for actively traded securities, fixed income securities may
be valued on the basis of prices provided by a pricing service when such
prices are believed to reflect the fair market value of the securities.
Pricing services generally take into account institutional size trading in
similar groups of securities. The pricing service and valuation procedures
are reviewed and subject to approval by the Board of Directors.
Although the methodology and procedures for determining net asset value are
identical for all classes of shares, the net asset value per share of
different classes of shares of the same Fund may differ because of the
distribution expenses charged to Class A and Class B Shares.
FOREIGN SECURITIES
Any assets or liabilities of the Funds initially expressed in terms of
foreign currencies are translated into United States dollars using current
exchange rates. Trading in securities on foreign markets may be completed
before the close of business on each business day of the Funds. Thus, the
calculation of the Funds' net asset value may not take place
contemporaneously with the determination of the prices of foreign securities
held in the Funds' portfolios. If events materially affecting the value of
foreign securities occur between the time when their price is determined and
the time when the Funds' net asset value is calculated, such securities will
be valued at fair value as determined in good faith by or under the direction
of the Board of Directors. In addition, trading in securities on foreign
markets may not take place on all days on which the New York Stock Exchange
is open for business or may take place on days on which the Exchange is not
open for business. Therefore, the net asset value of a Fund which holds
foreign securities might be significantly affected on days when an investor
has no access to the Fund.
FEDERAL INCOME TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
during its current taxable year in order to be relieved of payment of federal
income taxes on amounts of taxable income it distributes to shareholders.
Dividends paid from each Fund's net investment income and net short-term
capital gains will be taxable to shareholders as ordinary income, whether or
not the shareholder elects to have such dividends automatically reinvested in
additional shares. Dividends paid by the Funds attributable to investments in
the securities of foreign issuers will not be eligible for the 70% deduction
for dividends received by corporations.
Dividends paid from the net capital gains of each Fund and designated as
capital gain dividends will be taxable to shareholders as long-term capital
gains, regardless of the length of time for which they have held their shares
in the Fund. Long-term capital gains of individuals are currently subject to
a maximum tax rate of 28%.
Gain or loss realized upon the sale of shares in the Funds will be treated as
capital gain or loss, provided that the shares represented a capital asset in
the hands of the shareholder. Such gain or loss will be long-term gain or
loss if the shares were held for more than one year.
International Fund may be required to pay withholding and other taxes imposed
by foreign countries, generally at rates from 10% to 40%, which would reduce
the Fund's investment income. Tax conventions between certain countries and
the United States may reduce or eliminate such taxes. If at the end of
International Fund's taxable year more than 50% of its total assets consist
of securities of foreign corporations, it will be eligible to file an
election with the Internal Revenue Service pursuant to which shareholders of
the Fund will be required to include their respective pro rata portions of
such foreign taxes in gross income, treat such amounts as foreign taxes paid
by them, and deduct such amounts in computing their taxable income or,
alternatively, use them as foreign tax credits against their federal income
taxes. If such an election is filed for a year, International Fund
shareholders will be notified of the amounts which they may deduct as foreign
taxes paid or use as foreign tax credits.
Alternatively, if the amount of foreign taxes paid by International Fund is
not large enough to warrant its making the election described above, the Fund
may claim the amount of foreign taxes paid as a deduction against its own
gross income. In that case, shareholders would not be required to include any
amount of foreign taxes paid by the Fund in their income and would not be
permitted either to deduct any portion of foreign taxes from their own income
or to claim any amount of foreign tax credit for taxes paid by the Fund.
Each Fund is required by federal law to withhold 31% of reportable payments
(including dividends, capital gain distributions, and redemptions) paid to
certain accounts whose owners have not complied with IRS regulations. In
order to avoid this withholding requirement, each shareholder will be asked
to certify on the shareholder's account application that the social security
or taxpayer identification number provided is correct and that the
shareholder is not subject to backup withholding for previous underreporting
to the IRS.
This is a general summary of the federal tax laws applicable to the Funds and
their shareholders as of the date of this Prospectus. See the Statement of
Additional Information for further details. Before investing in the Funds, an
investor should consult his or her tax adviser about the consequences of
state and local tax laws.
FUND SHARES
Each share of a Fund is fully paid, nonassessable, and transferable. Shares
may be issued as either full or fractional shares. Fractional shares have pro
rata the same rights and privileges as full shares. Shares of the Funds have
no preemptive or conversion rights.
Each share of a Fund has one vote. On some issues, such as the election of
directors, all shares of all FAIF Funds vote together as one series. The
shares do not have cumulative voting rights. Consequently, the holders of
more than 50% of the shares voting for the election of directors are able to
elect all of the directors if they choose to do so. On issues affecting only
a particular Fund or Class, the shares of that Fund or Class will vote as a
separate series. Examples of such issues would be proposals to alter a
fundamental investment restriction pertaining to a Fund or to approve,
disapprove or alter a distribution plan pertaining to a Class.
Under the laws of the State of Maryland and FAIF's Articles of Incorporation,
FAIF is not required to hold shareholder meetings unless they (i) are
required by the 1940 Act, or (ii) are requested in writing by the holders of
25% or more of the outstanding shares of FAIF.
CALCULATION OF PERFORMANCE DATA
From time to time, any of the Funds may advertise information regarding its
performance. Each Fund may publish its "yield," its "cumulative total
return," its "average annual total return" and its "distribution rate."
Distribution rates may only be used in connection with sales literature and
shareholder communications preceded or accompanied by a Prospectus. Each of
these performance figures is based upon historical results and is not
intended to indicate future performance, and, except for "distribution rate,"
is standardized in accordance with Securities and Exchange Commission ("SEC")
regulations.
"Yield" for the Funds is computed by dividing the net investment income per
share (as defined in applicable SEC regulations) earned during a 30-day
period (which period will be stated in the advertisement) by the maximum
offering price per share on the last day of the period. Yield is an
annualized figure, in that it assumes that the same level of net investment
income is generated over a one year period. The yield formula annualizes net
investment income by providing for semi-annual compounding.
"Total return" is based on the overall dollar or percentage change in value
of a hypothetical investment in a Fund assuming reinvestment of dividend
distributions and deduction of all charges and expenses, including, as
applicable, the maximum sales charge imposed on Class A Shares or the
contingent deferred sales charge imposed on Class B Shares redeemed at the
end of the specified period covered by the total return figure. "Cumulative
total return" reflects a Fund's performance over a stated period of time.
"Average annual total return" reflects the hypothetical annually compounded
rate that would have produced the same cumulative total return if performance
had been constant over the entire period. Because average annual returns tend
to smooth out variations in a Fund's performance, they are not the same as
actual year-by-year results. As a supplement to total return computations, a
Fund may also publish "total investment return" computations which do not
assume deduction of the maximum sales charge imposed on Class A Shares or the
contingent deferred sales charge imposed on Class B Shares.
"Distribution rate" is determined by dividing the income dividends per share
for a stated period by the maximum offering price per share on the last day
of the period. All distribution rates published for the Funds are measures of
the level of income dividends distributed during a specified period. Thus,
these rates differ from yield (which measures income actually earned by a
Fund) and total return (which measures actual income, plus realized and
unrealized gains or losses of a Fund's investments). Consequently,
distribution rates alone should not be considered complete measures of
performance.
The performance of the Class A and Class B Shares of a Fund will normally be
lower than for the Class C Shares because Class C Shares are not subject to
the sales charges and distribution expenses applicable to Class A and Class B
Shares. In addition, the performance of Class A and Class B Shares of a Fund
will differ because of the different sales charge structures of the classes
and because of the higher distribution and service fees charged to Class B
Shares.
In reports or other communications to shareholders and in advertising
material, the performance of each Fund may be compared to recognized
unmanaged indices or averages of the performance of similar securities. Also,
the performance of each Fund may be compared to that of other funds of
similar size and objectives as listed in the rankings prepared by Lipper
Analytical Services, Inc. or similar independent mutual fund rating services,
and each Fund may include in such reports, communications and advertising
material evaluations published by nationally recognized independent ranking
services and publications. For further information regarding the Funds'
performance, see "Fund Performance" in the Statement of Additional
Information.
SPECIAL INVESTMENT METHODS
This section provides additional information concerning the securities in
which the Funds may invest and related topics. Further information concerning
these matters is contained in the Statement of Additional Information.
CASH ITEMS
The "cash items" in which the Funds may invest, as described under
"Investment Objectives and Policies," include short-term obligations such as
rated commercial paper and variable amount master demand notes; United States
dollar-denominated time and savings and time deposits (including certificates
of deposit); bankers acceptances; obligations of the United States Government
or its agencies or instrumentalities; repurchase agreements collateralized by
eligible investments of a Fund; securities of other mutual funds which invest
primarily in debt obligations with remaining maturities of 13 months or less
(which investments also are subject to the advisory fee); and other similar
high-quality short-term United States dollar-denominated obligations.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. A repurchase
agreement involves the purchase by a Fund of securities with the agreement
that after a stated period of time, the original seller will buy back the
same securities ("collateral") at a predetermined price or yield. Repurchase
agreements involve certain risks not associated with direct investments in
securities. If the original seller defaults on its obligation to repurchase
as a result of its bankruptcy or otherwise, the purchasing Fund will seek to
sell the collateral, which could involve costs or delays. Although collateral
(which may consist of any fixed income security which is an eligible
investment for the Fund entering into the repurchase agreement) will at all
times be maintained in an amount equal to the repurchase price under the
agreement (including accrued interest), a Fund would suffer a loss if the
proceeds from the sale of the collateral were less than the agreed-upon
repurchase price. The Adviser or, in the case of International Fund, the
Sub-Adviser will monitor the creditworthiness of the firms with which the
Funds enter into repurchase agreements.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
Each of the Funds (excluding Equity Index Fund) may purchase securities on a
when-issued or delayed-delivery basis. When such a transaction is negotiated,
the purchase price is fixed at the time the purchase commitment is entered,
but delivery of and payment for the securities take place at a later date. A
Fund will not accrue income with respect to securities purchased on a
when-issued or delayed-delivery basis prior to their stated delivery date.
Pending delivery of the securities, each Fund will maintain in a segregated
account cash or liquid high-grade securities in an amount sufficient to meet
its purchase commitments.
The purchase of securities on a when-issued or delayed-delivery basis exposes
a Fund to risk because the securities may decrease in value prior to
delivery. In addition, a Fund's purchase of securities on a when-issued or
delayed-delivery basis while remaining substantially fully invested could
increase the amount of the Fund's total assets that are subject to market
risk, resulting in increased sensitivity of net asset value to changes in
market prices. However, the Funds will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with their investment objectives, and not for the
purpose of investment leverage. A seller's failure to deliver securities to a
Fund could prevent the Fund from realizing a price or yield considered to be
advantageous.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, each of the Funds (excluding Equity
Index Fund) may lend portfolio securities representing up to one-third of the
value of its total assets to broker-dealers, banks or other institutional
borrowers of securities. As with other extensions of credit, there may be
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
the Funds will only enter into loan arrangements with broker-dealers, banks,
or other institutions which the Adviser or, in the case of International
Fund, the Sub-Adviser has determined are creditworthy under guidelines
established by the Board of Directors. In these loan arrangements, the Funds
will receive collateral in the form of cash, United States Government
securities or other high-grade debt obligations equal to at least 100% of the
value of the securities loaned. Collateral is marked to market daily. The
Funds will pay a portion of the income earned on the lending transaction to
the placing broker and may pay administrative and custodial fees in
connection with these loans.
OPTIONS TRANSACTIONS
PURCHASES OF PUT AND CALL OPTIONS. The Funds may purchase put and call options
to the extent specified with respect to particular Funds under "Investment
Objectives and Policies." These transactions will be undertaken only for the
purpose of reducing risk to the Funds; that is, for "hedging" purposes.
Depending on the Fund, these transactions may include the purchase of put and
call options on equity securities, on stock indices, on interest rate indices,
or (only in the case of International Fund) on foreign currencies. Options on
futures contracts are discussed below under "Futures and Options on Futures."
A put option on a security gives the purchaser of the option the right (but
not the obligation) to sell, and the writer of the option the obligation to
buy, the underlying security at a stated price (the "exercise price") at any
time before the option expires. A call option on a security gives the
purchaser the right (but not the obligation) to buy, and the writer the
obligation to sell, the underlying security at the exercise price at any time
before the option expires. The purchase price for a put or call option is the
"premium" paid by the purchaser for the right to sell or buy.
Options on indices are similar to options on securities except that, rather
than the right to take or make delivery of a specific security at a stated
price, an option on an index gives the holder the right to receive, upon
exercise of the option, a defined amount of cash if the closing value of the
index upon which the option is based is greater than, in the case of a call,
or less than, in the case of a put, the exercise price of the option.
None of the Funds other than International Fund will invest more than 5% of
the value of its total assets in purchased options, provided that options
which are "in the money" at the time of purchase may be excluded from this 5%
limitation. A call option is "in the money" if the exercise price is lower
than the current market price of the underlying security or index, and a put
option is "in the money" if the exercise price is higher than the current
market price. A Fund's loss exposure in purchasing an option is limited to
the sum of the premium paid and the commission or other transaction expenses
associated with acquiring the option.
The use of purchased put and call options involves certain risks. These
include the risk of an imperfect correlation between market prices of
securities held by a Fund and the prices of options, and the risk of limited
liquidity in the event that a Fund seeks to close out an options position
before expiration by entering into an offsetting transaction.
WRITING OF COVERED CALL OPTIONS. The Funds may write (sell) covered call options
to the extent specified with respect to particular Funds under "Investment
Objectives and Policies." These transactions would be undertaken principally to
produce additional income. Depending on the Fund, these transactions may include
the writing of covered call options on equity securities or (only in the case of
International Fund) on foreign currencies which a Fund owns or has the right to
acquire or on interest rate indices.
When a Fund sells a covered call option, it is paid a premium by the
purchaser. If the market price of the security covered by the option does not
increase above the exercise price before the option expires, the option
generally will expire without being exercised, and the Fund will retain both
the premium paid for the option and the security. If the market price of the
security covered by the option does increase above the exercise price before
the option expires, however, the option is likely to be exercised by the
purchaser. In that case the Fund will be required to sell the security at the
exercise price, and it will not realize the benefit of increases in the
market price of the security above the exercise price of the option.
FUTURES AND OPTIONS ON FUTURES
Equity Index Fund, Balanced Fund, Asset Allocation Fund and International
Fund may engage in futures transactions and purchase options on futures to
the extent specified with under "Investment Objectives and Policies."
Depending on the Fund, these transactions may include the purchase of stock
index futures and options on stock index futures, and the purchase of
interest rate futures and options on interest rate futures. In addition,
International Fund may enter into contracts for the future delivery of
securities or foreign currencies and futures contracts based on a specific
security, class of securities, or foreign currency.
A futures contract on a security obligates one party to purchase, and the
other to sell, a specified security at a specified price on a date certain in
the future. A futures contract on an index obligates the seller to deliver,
and entitles the purchaser to receive, an amount of cash equal to a specific
dollar amount times the difference between the value of the index at the
expiration date of the contract and the index value specified in the
contract. The acquisition of put and call options on futures contracts will,
respectively, give a Fund the right (but not the obligation), for a specified
exercise price, to sell or to purchase the underlying futures contract at any
time during the option period.
A Fund may use futures contracts and options on futures in an effort to hedge
against market risks and, in the case of International Fund, as part of its
management of foreign currency transactions. In addition, Equity Index Fund
may use stock index futures and options on futures to maintain sufficient
liquidity to meet redemption requests, to increase the level of Fund assets
devoted to replicating the composition of the S&P 500, and to reduce
transaction costs.
Aggregate initial margin deposits for futures contracts, and premiums paid
for related options, may not exceed 5% of a Fund's total assets, and the
value of securities that are the subject of such futures and options (both
for receipt and delivery) may not exceed 1/3 of the market value of a Fund's
total assets. Futures transactions will be limited to the extent necessary to
maintain each Fund's qualification as a regulated investment company under
the Internal Revenue Code of 1986, as amended.
Futures transactions involve brokerage costs and require a Fund to segregate
assets to cover contracts that would require it to purchase securities or
currencies. A Fund may lose the expected benefit of futures transactions if
interest rates, exchange rates or securities prices move in an unanticipated
manner. Such unanticipated changes may also result in poorer overall
performance than if the Fund had not entered into any futures transactions.
In addition, the value of a Fund's futures positions may not prove to be
perfectly or even highly correlated with the value of its portfolio
securities or foreign currencies, limiting the Fund's ability to hedge
effectively against interest rate, exchange rate and/or market risk and
giving rise to additional risks. There is no assurance of liquidity in the
secondary market for purposes of closing out futures positions.
FIXED INCOME SECURITIES
The fixed income securities in which Stock Fund, Limited Volatility Stock
Fund, Equity Income Fund, Diversified Growth Fund, Emerging Growth Fund,
Regional Equity Fund, Special Equity Fund, and Technology Fund may invest
include securities issued or guaranteed by the United States Government or
its agencies or instrumentalities, nonconvertible preferred stocks,
nonconvertible corporate debt securities, and short-term obligations of the
kinds described above under "-- Cash Items." Investments in nonconvertible
preferred stocks and nonconvertible corporate debt securities will be limited
to securities which are rated at the time of purchase not less than BBB by
Standard & Poor's or Baa by Moody's (or equivalent short-term ratings), or
which have been assigned an equivalent rating by another nationally
recognized statistical rating organization, or which are of comparable
quality in the judgment of the Adviser. Obligations rated BBB, Baa or their
equivalent, although investment grade, have speculative characteristics and
carry a somewhat higher risk of default than obligations rated in the higher
investment grade categories.
Equity Income Fund also may invest a portion of its assets in less than
investment grade convertible debt obligations. For a description of such
obligations and the risks associated therewith, see "Investment Objectives
and Policies -- Equity Income Fund."
The fixed income securities specified above, as well as the fixed income
securities in which Balanced Fund and Asset Allocation Fund may invest as
described under "Investment Objectives and Policies," are subject to (i)
interest rate risk (the risk that increases in market interest rates will
cause declines in the value of debt securities held by a Fund); (ii) credit
risk (the risk that the issuers of debt securities held by a Fund default in
making required payments); and (iii) call or prepayment risk (the risk that a
borrower may exercise the right to prepay a debt obligation before its stated
maturity, requiring a Fund to reinvest the prepayment at a lower interest
rate).
FOREIGN SECURITIES
GENERAL. Under normal market conditions International Fund invests at least 65%
of its total assets in equity securities which trade in markets other than the
United States. In addition, the other Funds (excluding Equity Index Fund, Asset
Allocation Fund, and Regional Equity Fund) may invest lesser proportions of
their assets in securities of foreign issuers which are either listed on a
United States securities exchange or represented by American Depositary
Receipts.
Investment in foreign securities is subject to special investment risks that
differ in some respects from those related to investments in securities of
United States domestic issuers. These risks include political, social or
economic instability in the country of the issuer, the difficulty of
predicting international trade patterns, the possibility of the imposition of
exchange controls, expropriation, limits on removal of currency or other
assets, nationalization of assets, foreign withholding and income taxation,
and foreign trading practices (including higher trading commissions,
custodial charges and delayed settlements). Foreign securities also may be
subject to greater fluctuations in price than securities issued by United
States corporations. The principal markets on which these securities trade
may have less volume and liquidity, and may be more volatile, than securities
markets in the United States.
In addition, there may be less publicly available information about a foreign
company than about a United States domiciled company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to United States domestic
companies. There is also generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the United States.
Confiscatory taxation or diplomatic developments could also affect investment
in those countries. In addition, foreign branches of United States banks,
foreign banks and foreign issuers may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting, and
recordkeeping standards than those applicable to domestic branches of United
States banks and United States domestic issuers.
AMERICAN DEPOSITARY RECEIPTS AND EUROPEAN DEPOSITARY RECEIPTS. For many foreign
securities, United States dollar-denominated American Depositary Receipts, which
are traded in the United States on exchanges or over-the-counter, are issued by
domestic banks. American Depositary Receipts represent the right to receive
securities of foreign issuers deposited in a domestic bank or a correspondent
bank. American Depositary Receipts do not eliminate all the risk inherent in
investing in the securities of foreign issuers. However, by investing in
American Depositary Receipts rather than directly in foreign issuers' stock, a
Fund can avoid currency risks during the settlement period for either purchases
or sales. In general, there is a large, liquid market in the United States for
many American Depositary Receipts. The information available for American
Depositary Receipts is subject to the accounting, auditing and financial
reporting standards of the domestic market or exchange on which they are traded,
which standards are more uniform and more exacting than those to which many
foreign issuers may be subject. International Fund also may invest in European
Depositary Receipts, which are receipts evidencing an arrangement with a
European bank similar to that for American Depositary Receipts and which are
designed for use in the European securities markets. European Depositary
Receipts are not necessarily denominated in the currency of the underlying
security.
Certain American Depositary Receipts and European Depositary Receipts,
typically those denominated as unsponsored, require the holders thereof to
bear most of the costs of the facilities while issuers of sponsored
facilities normally pay more of the costs thereof. The depository of an
unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited
securities or to pass through the voting rights to facility holders in
respect to the deposited securities, whereas the depository of a sponsored
facility typically distributes shareholder communications and passes through
voting rights.
FOREIGN CURRENCY TRANSACTIONS
International Fund invests in securities which are purchased and sold in
foreign currencies. The value of its assets as measured in United States
dollars therefore may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations.
International Fund also will incur costs in converting United States dollars
to local currencies, and vice versa.
International Fund will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market, or through forward contracts to purchase or
sell foreign currencies. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a future
date certain at a specified price. These forward currency contracts are
traded directly between currency traders (usually large commercial banks) and
their customers.
International Fund may enter into forward currency contracts in order to
hedge against adverse movements in exchange rates between currencies. It may
engage in "transaction hedging" to protect against a change in the foreign
currency exchange rate between the date the Fund contracts to purchase or
sell a security and the settlement date, or to "lock in" the United States
dollar equivalent of a dividend or interest payment made in a foreign
currency. It also may engage in "portfolio hedging" to protect against a
decline in the value of its portfolio securities as measured in United States
dollars which could result from changes in exchange rates between the United
States dollar and the foreign currencies in which the portfolio securities
are purchased and sold. International Fund also may hedge its foreign
currency exchange rate risk by engaging in currency financial futures and
options transactions.
Although a foreign currency hedge may be effective in protecting the Fund
from losses resulting from unfavorable changes in exchanges rates between the
United States dollar and foreign currencies, it also would limit the gains
which might be realized by the Fund from favorable changes in exchange rates.
The Sub-Adviser's decision whether to enter into currency hedging
transactions will depend in part on its view regarding the direction and
amount in which exchange rates are likely to move. The forecasting of
movements in exchange rates is extremely difficult, so that it is highly
uncertain whether a hedging strategy, if undertaken, would be successful. To
the extent that the Sub-Adviser's view regarding future exchange rates proves
to have been incorrect, International Fund may realize losses on its foreign
currency transactions.
International Fund does not intend to enter into forward currency contracts
or maintain a net exposure in such contracts where it would be obligated to
deliver an amount of foreign currency in excess of the value of its portfolio
securities or other assets denominated in that currency.
MORTGAGE-BACKED SECURITIES
With respect to the fixed income portion of its portfolio, Balanced Fund may
invest in mortgage-backed securities which are Agency Pass-Through
Certificates or collateralized mortgage obligations ("CMOs"), as described
below.
Agency Pass-Through Certificates are mortgage pass-through certificates
representing undivided interests in pools of residential mortgage loans.
Distribution of principal and interest on the mortgage loans underlying an
Agency Pass-Through Certificate is an obligation of or guaranteed by
Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA"), or the Federal Home Loan Mortgage Corporation
("FHLMC"). The obligation of GNMA with respect to such certificates is backed
by the full faith and credit of the United States, while the obligations of
FNMA and FHLMC with respect to such certificates rely solely on the assets
and credit of those entities. The mortgage loans underlying GNMA certificates
are partially or fully guaranteed by the Federal Housing Administration or
the Veterans Administration, while the mortgage loans underlying FNMA
certificates and FHLMC certificates are conventional mortgage loans which
are, in some cases, insured by private mortgage insurance companies. Agency
Pass-Through Certificates may be issued in a single class with respect to a
given pool of mortgage loans or in multiple classes.
CMOs are debt obligations typically issued by a private special-purpose
entity and collateralized by residential mortgage loans or Agency
Pass-Through Certificates. Balanced Fund will invest only in CMOs which are
rated AAA by Standard & Poor's or Aaa by Moody's or which have been assigned
an equivalent rating by another nationally recognized statistical rating
organization, and which are either (i) collateralized by Agency Pass-Through
Certificates, (ii) collateralized by a pool of residential mortgage loans in
which each mortgage loan is guaranteed as to payment of principal and
interest by an agency or instrumentality of the United States Government, or
(iii) collateralized by a pool of residential mortgage loans and payment on
which is otherwise supported by obligations of the United States Government
or its agencies or instrumentalities. Because CMOs are debt obligations of
private entities, payments on CMOs generally are not obligations of or
guaranteed by any governmental entity, and their ratings and creditworthiness
typically depend on the legal insulation of the issuer and transaction from
the consequences of a sponsoring entity's bankruptcy. CMOs generally are
issued in multiple classes, with holders of each class entitled to receive
specified portions of the principal payments and prepayments and/or of the
interest payments on the underlying mortgage loans. These entitlements can be
specified in a wide variety of ways, so that the payment characteristics of
various classes may differ greatly from one another. Examples of the more
common classes are provided in the Statement of Additional Information.
It generally is more difficult to predict the effect of changes in market
interest rates on the return on mortgaged-backed securities than to predict
the effect of such changes on the return of a conventional fixed-rate debt
instrument, and the magnitude of such effects may be greater in some cases.
The return on interest-only and principal-only mortgage-backed securities is
particularly sensitive to changes in interest rates and prepayment speeds.
When interest rates decline and prepayment speeds increase, the holder of an
interest-only mortgage-backed security may not even recover its initial
investment. Similarly, the return on an inverse floating rate CMO is likely
to decline more sharply in periods of increasing interest rates than that of
a fixed-rate security. For these reasons, interest-only, principal-only and
inverse floating rate mortgage-backed securities generally have greater risk
than more conventional classes of mortgage-backed securities. Balanced Fund
will not invest more than 10% of its total fixed income assets in
interest-only, principal-only or inverse floating rate mortgage backed
securities.
ASSET-BACKED SECURITIES
With respect to the fixed income portion of its portfolio, Balanced Fund may
invest in asset-backed securities. Asset-backed securities generally
constitute interests in, or obligations secured by, a pool of receivables
other than mortgage loans, such as automobile loans and leases, credit card
receivables, home equity loans and trade receivables. Asset-backed securities
generally are issued by a private special-purpose entity. Their ratings and
creditworthiness typically depend on the legal insulation of the issuer and
transaction from the consequences of a sponsoring entity's bankruptcy, as
well as on the credit quality of the underlying receivables and the amount
and credit quality of any third-party credit enhancement supporting the
underlying receivables or the asset-backed securities. Asset-backed
securities and their underlying receivables generally are not issued or
guaranteed by any governmental entity.
BANK INSTRUMENTS
The bank instruments in which Balanced Fund may invest include time and
savings deposits, deposit notes and bankers acceptances (including
certificates of deposit) in commercial or savings banks. They also include
Eurodollar Certificates of Deposit issued by foreign branches of United
States or foreign banks; Eurodollar Time Deposits, which are United States
dollar-denominated deposits in foreign branches of United States or foreign
banks; and Yankee Certificates of Deposit, which are United States
dollar-denominated certificates of deposit issued by United States branches
of foreign banks and held in the United States. For a description of certain
risks of investing in foreign issuers' securities, see "-- Foreign
Securities" above. In each instance, Balanced Fund may only invest in bank
instruments issued by an institution which has capital, surplus and undivided
profits of more than $100 million or the deposits of which are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund.
PORTFOLIO TRANSACTIONS
Portfolio transactions in the over-the-counter market will be effected with
market makers or issuers, unless better overall price and execution are
available through a brokerage transaction. It is anticipated that most
portfolio transactions involving debt securities will be executed on a
principal basis. Also, with respect to the placement of portfolio
transactions with securities firms, subject to the overall policy to seek to
place portfolio transactions as efficiently as possible and at the best
price, research services and placement of orders by securities firms for a
Fund's shares may be taken into account as a factor in placing portfolio
transactions for the Fund.
PORTFOLIO TURNOVER
Although the Funds do not intend generally to trade for short-term profits,
they may dispose of a security without regard to the time it has been held
when such action appears advisable to the Adviser or, in the case of
International Fund, the Sub-Adviser. The portfolio turnover rate for a Fund
may vary from year to year and may be affected by cash requirements for
redemptions of shares. High portfolio turnover rates generally would result
in higher transaction costs and could result in additional tax consequences
to a Fund's shareholders.
INVESTMENT RESTRICTIONS
The fundamental and nonfundamental investment restrictions of the Funds are
set forth in full in the Statement of Additional Information. The fundamental
restrictions include the following:
* None of the Funds will borrow money, except from banks for temporary or
emergency purposes. The amount of such borrowing may not exceed 10% of the
borrowing Fund's total assets, except for Asset Allocation Fund, which may
borrow in amounts not to exceed 33-1/3% of its total assets. None of the
Funds will borrow money for leverage purposes. For the purpose of this
investment restriction, the use of options and futures transactions and the
purchase of securities on a when-issued or delayed-delivery basis shall not
be deemed the borrowing of money.
* None of the Funds will mortgage, pledge or hypothecate its assets, except
in an amount not exceeding 15% of the value of its total assets to secure
temporary or emergency borrowing.
* None of the Funds will make short sales of securities.
* None of the Funds will purchase any securities on margin except to obtain
such short-term credits as may be necessary for the clearance of
transactions and except, in the case of Emerging Growth Fund, Technology
Fund, International Fund and Limited Volatility Stock Fund, as may be
necessary to make margin payments in connection with foreign currency
futures and other derivative transactions.
A fundamental policy or restriction, including those stated above, cannot be
changed without an affirmative vote of the holders of a "majority" of the
outstanding shares of the applicable Fund, as defined in the 1940 Act.
As a nonfundamental policy, none of the Funds will invest more than 15% of
its net assets in all forms of illiquid investments, as determined pursuant
to applicable Securities and Exchange Commission rules and interpretations.
Section 4(2) commercial paper may be determined to be "liquid" under
guidelines adopted by the Board of Directors. Rule 144A securities may in the
future be determined to be "liquid" under guidelines adopted by the Board of
Directors if the current position of certain state securities regulators
regarding such securities is modified. Investing in Rule 144A securities
could have the effect of increasing the level of illiquidity in a Fund to the
extent that qualified institutional buyers become, for a time, uninterested
in purchasing these securities.
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Investment Adviser
FIRST BANK NATIONAL ASSOCIATION
601 Second Avenue South
Minneapolis, Minnesota 55402
Custodian
FIRST TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
Distributor
SEI FINANCIAL SERVICES COMPANY
680 East Swedesford Road
Wayne, Pennsylvania 19087
Administrator
SEI FINANCIAL MANAGEMENT CORPORATION
680 East Swedesford Road
Wayne, Pennsylvania 19087
Transfer Agent
SUPERVISED SERVICE COMPANY
811 Main Street
Kansas City, Missouri 64105
Independent Auditors
KPMG PEAT MARWICK LLP
90 South Seventh Street
Minneapolis, Minnesota 55402
Counsel
DORSEY & WHITNEY P.L.L.P.
220 South Sixth Street
Minneapolis, Minnesota 55402
FAIF-1003 (1/95)R
FIRST AMERICAN INVESTMENT FUNDS, INC.
EQUITY FUNDS
Institutional Class
Stock Fund Diversified Growth Fund
Equity Index Fund Emerging Growth Fund
Balanced Fund Regional Equity Fund
Limited Volatility Stock Fund Special Equity Fund
Asset Allocation Fund Technology Fund
Equity Income Fund International Fund
PROSPECTUS
January 31, 1995
[LOGO] First American Funds
The power of disciplined investing
TABLE OF CONTENTS
PAGE
SUMMARY 4
FEES AND EXPENSES 8
Class C Share Fees and Expenses 8
Information Concerning Fees and
Expenses 10
FINANCIAL HIGHLIGHTS 12
THE FUNDS 16
INVESTMENT OBJECTIVES AND POLICIES 16
Stock Fund 17
Equity Index Fund 18
Balanced Fund 19
Limited Volatility Stock Fund 20
Asset Allocation Fund 21
Equity Income Fund 23
Diversified Growth Fund 24
Emerging Growth Fund 25
Regional Equity Fund 26
Special Equity Fund 27
Technology Fund 28
International Fund 29
Risks to Consider 31
MANAGEMENT 32
Investment Adviser 32
Sub-Adviser to International Fund 33
Portfolio Managers 33
Custodian 36
Administrator 37
Transfer Agent 37
DISTRIBUTOR 37
PURCHASES AND REDEMPTIONS OF SHARES 38
Share Purchases and Redemptions 38
What Shares Cost 38
Exchanging Securities for Fund Shares 40
Certificates and Confirmations 40
Dividends and Distributions 40
Exchange Privilege 41
FEDERAL INCOME TAXES 41
FUND SHARES 43
CALCULATION OF PERFORMANCE DATA 43
SPECIAL INVESTMENT METHODS 44
Cash Items 44
Repurchase Agreements 45
When-Issued and Delayed-Delivery
Transactions 45
Lending of Portfolio Securities 46
Options Transactions 46
Futures and Options on Futures 47
Fixed Income Securities 48
Foreign Securities 49
Foreign Currency Transactions 51
Mortgage-Backed Securities 52
Asset-Backed Securities 53
Bank Instruments 53
Portfolio Transactions 54
Portfolio Turnover 54
Investment Restrictions 54
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 East Swedesford Road, Wayne, Pennsylvania 19087
INSTITUTIONAL CLASS PROSPECTUS
The shares described in this Prospectus represent interests in First American
Investment Funds, Inc., which consists of mutual funds with several different
investment portfolios and objectives. This Prospectus relates to the Class C
Shares of the following funds (the "Funds"):
* Stock Fund * Diversified Growth Fund
* Equity Index Fund * Emerging Growth Fund
* Balanced Fund * Regional Equity Fund
* Limited Volatility Stock Fund * Special Equity Fund
* Asset Allocation Fund * Technology Fund
* Equity Income Fund * International Fund
Class C Shares of the Funds are offered through banks and certain other
institutions for the investment of their own funds and funds for which they act
in a fiduciary, agency or custodial capacity.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, INCLUDING FIRST BANK NATIONAL ASSOCIATION AND ANY OF ITS
AFFILIATES, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, DUE TO
FLUCTUATIONS IN EACH FUND'S NET ASSET VALUE.
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. It should be read and
retained for future reference.
A Statement of Additional Information dated January 31, 1995 for the Funds has
been filed with the Securities and Exchange Commission and is incorporated in
its entirety by reference in this Prospectus. To obtain copies of the Statement
of Additional Information at no charge, or to obtain other information or make
inquiries about the Funds, call (800) 637-2548 or write SEI Financial Services
Company, 680 East Swedesford Road, Wayne, Pennsylvania 19087.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January 31, 1995.
SUMMARY
First American Investment Funds, Inc. ("FAIF") is an open-end investment company
which offers shares in several different mutual funds. This Prospectus provides
information with respect to the Class C Shares of the following funds (the
"Funds"):
STOCK FUND has a primary objective of capital appreciation and a secondary
objective to provide current income. Under normal market conditions, the Fund
invests at least 80% of its total assets in equity securities diversified among
a broad range of industries and among companies that have a market
capitalization of at least $500 million. In selecting equity securities, the
Fund's adviser employs a value-based selection discipline.
EQUITY INDEX FUND has an objective of providing investment results that
correspond to the performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"). The Fund invests substantially in common stocks included
in the S&P 500. The Fund's adviser believes that its objective can best be
achieved by investing in the common stocks of approximately 250 to 500 of the
issues included in the S&P 500.
BALANCED FUND has an objective of maximizing total return (capital appreciation
plus income). The Fund seeks to achieve its objective by investing in a balanced
portfolio of equity securities and fixed income securities. Over the long term,
it is anticipated that the Fund's asset mix will average approximately 60%
equity securities and 40% fixed income securities, with the asset mix normally
ranging between 40% and 75% equity securities, between 25% and 60% fixed income
securities, and between 0% and 25% money market instruments.
LIMITED VOLATILITY STOCK FUND has a primary objective of maximizing total return
(capital appreciation plus income) within the constraint of controlling the
volatility of the Fund to a level below that of the major market indices such as
the S&P 500 and the Dow Jones Industrial Average, and a secondary objective to
provide current income at a level that exceeds that of the S&P 500. Under normal
market conditions, the Fund invests at least 80% of its total assets in equity
securities diversified among a broad range of industries and among companies
that have a market capitalization of at least $500 million.
ASSET ALLOCATION FUND has an objective of maximizing total return over the long
term by allocating its assets principally among common stocks, bonds, and
short-term instruments. There are no limitations on the proportions in which the
Fund's adviser may allocate the Fund's investments among these three classes of
assets, and the Fund may at times be fully invested in a single asset class if
the adviser believes that it offers the most favorable total return outlook.
EQUITY INCOME FUND has an objective of long-term growth of capital and income.
Under normal market conditions, the Fund invests at least 80% of its total
assets in equity securities of issuers believed by the Fund's adviser to be
characterized by sound management, the ability to finance expected growth and
the ability to pay above average dividends.
DIVERSIFIED GROWTH FUND has a primary objective of long-term growth of capital
and a secondary objective to provide current income. Under normal market
conditions, the Fund invests at least 80% of its total assets in equity
securities of a diverse group of companies that will provide representation
across all economic sectors included in the S&P 500. The adviser may overweight
the Fund's portfolio holdings in sectors that it believes provide above average
total return potential.
EMERGING GROWTH FUND has an objective of growth of capital. Under normal market
conditions, the Fund invests at least 65% of its total assets in equity
securities of small-sized companies that exhibit, in the adviser's opinion,
outstanding potential for superior growth. Companies that participate in sectors
that are identified by the adviser as having long-term growth potential
generally are expected to make up a substantial portion of the Fund's holdings.
REGIONAL EQUITY FUND has an objective of capital appreciation. The Fund seeks to
achieve its objective by investing, in normal market conditions, at least 65% of
its total assets in equity securities of small-sized companies headquartered in
Minnesota, North and South Dakota, Montana, Wisconsin, Michigan, Iowa, Nebraska,
Colorado and Illinois. The Fund invests in the securities of rapidly growing
companies within this size category and geographic area.
SPECIAL EQUITY FUND has an objective of capital appreciation. Under normal
market conditions, the Fund invests at least 65% of its total assets in equity
securities. The Fund's policy is to invest in equity securities which the Fund's
adviser believes offer the potential for greater than average capital
appreciation. The adviser believes that this policy can best be achieved by
investing in the equity securities of companies where fundamental changes are
occurring, are likely to occur, or have occurred and where, in the opinion of
the adviser, the changes have not been adequately reflected in the price of the
securities.
TECHNOLOGY FUND has an objective of long-term growth of capital. Under normal
market conditions, the Fund invests at least 80% of its total assets in equity
securities. The Fund anticipates investing in companies which the Fund's adviser
believes have, or will develop, products, processes or services that will
provide or will benefit significantly from technological advances and
improvements.
INTERNATIONAL FUND has an objective of long-term growth of capital. Under normal
market conditions, the Fund invests at least 65% of its total assets in an
internationally diversified portfolio of equity securities which trade in
markets other than the United States. Investments are expected to be made
primarily in developed markets and larger capitalization companies. However, the
Fund also may invest in emerging markets where smaller capitalization companies
are the norm.
INVESTMENT ADVISER AND SUB-ADVISER First Bank National Association (the
"Adviser") serves as investment adviser to each of the Funds. Marvin & Palmer
Associates, Inc. (the "Sub-adviser") serves as sub-adviser to International
Fund. See "Management."
DISTRIBUTOR; ADMINISTRATOR SEI Financial Services Company (the
"Distributor") serves as the distributor of the Funds' shares. SEI Financial
Management Corporation (the "Administrator") serves as the administrator of
the Funds. See "Management" and "Distributor."
ELIGIBLE INVESTORS; OFFERING PRICES Class C Shares are offered through banks
and certain other institutions for the investment of their own funds and
funds for which they act in a fiduciary, agency or custodial capacity. Class
C Shares are sold at net asset value without any front-end or deferred sales
charges. See "Purchases and Redemptions of Shares."
EXCHANGES Class C Shares of any fund may be exchanged for Class C Shares of
other FAIF funds at the shares' respective net asset values with no
additional charge. See "Purchases and Redemptions of Shares -- Exchange
Privilege."
REDEMPTIONS Shares of each Fund may be redeemed at any time at their net
asset value next determined after receipt of a redemption request by the
Funds' transfer agent, with no additional charge. See "Purchases and
Redemptions of Shares."
RISKS TO CONSIDER Each of the Funds is subject to the risk of generally adverse
equity markets. Investors also should recognize that market prices of equity
securities generally, and of particular companies' equity securities, frequently
are subject to greater volatility than prices of fixed income securities.
Because each of the Funds other than Equity Index Fund is actively managed to a
greater or lesser degree, their performance will reflect in part the ability of
the Adviser or Sub-Adviser to select securities which are suited to achieving
their investment objectives. Due to their active management, these Funds could
underperform other mutual funds with similar investment objectives or the market
generally.
In addition, (i) certain of the Funds are subject to risks associated with
investing in smaller-capitalization companies; (ii) Regional Equity Fund is
subject to risks associated with concentrating its investments in a single
geographic region; (iii) Technology Fund is subject to risks associated with
concentrating its investments in a single or related economic sectors; (iv)
International Fund is subject to risks associated with investing in foreign
securities and to currency risk; (v) Equity Income Fund may invest a portion of
its assets in less than investment grade convertible debt obligations; (vi)
certain Funds other than International Fund may invest specified portions of
their assets in securities of foreign issuers which are listed on a United
States stock exchange or represented by American Depository Receipts or, in the
case of Balanced Fund, are debt obligations of foreign issuers denominated in
United States dollars; and (vii) certain Funds may invest (but not for
speculative purposes) in stock index futures contracts, options on stock
indices, options on stock index futures, index participation contracts based on
the S&P 500, and/or exchange traded put and call options on interest rate
futures contracts and on interest rate indices. See "Investment Objectives and
Policies" and "Special Investment Methods."
SHAREHOLDER INQUIRIES Any questions or communications regarding the Funds or a
shareholder account should be directed to the Distributor by calling (800)
637-2548, or to the financial institution which holds shares on an investor's
behalf.
FEES AND EXPENSES INSTITUTIONAL CLASSES
CLASS C SHARE FEES AND EXPENSES
<TABLE>
<CAPTION>
EQUITY LIMITED ASSET EQUITY
STOCK INDEX BALANCED VOLATILITY ALLOCATION INCOME DIVERSIFIED
FUND FUND FUND STOCK FUND FUND FUND GROWTH FUND
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on
purchases None None None None None None None
Maximum sales load imposed on
reinvested dividends None None None None None None None
Deferred sales load None None None None None None None
Redemption fees None None None None None None None
Exchange fees None None None None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment advisory fees (after
voluntary fee waivers and
reimbursements)(1) 0.56% 0.09% 0.52% 0.08% 0.54% 0.34% 0.37%
Rule 12b-1 fees None None None None None None None
Other expenses (after voluntary fee
waivers)(1) 0.24% 0.26% 0.28% 0.67% 0.26% 0.41% 0.38%
Total fund operating expenses
(after voluntary fee waivers
and reimbursements)(1) 0.80% 0.35% 0.80% 0.75% 0.80% 0.75% 0.75%
EXAMPLE(2)
You would pay the following expenses on
a $1,000 investment, assuming (i) a 5%
annual return; and (ii) redemption at the end
of each time period:
1 year $ 8 $ 4 $ 8 $ 8 $ 8 $ 8 $ 8
3 years $ 26 $ 11 $ 26 $ 24 $ 26 $ 24 $ 24
5 years $ 44 $ 20 $ 44 $ 42 $ 44 $ 42 $ 42
10 years $ 99 $ 44 $ 99 $ 93 $ 99 $ 93 $ 93
(table continued)
EMERGING REGIONAL SPECIAL
GROWTH EQUITY EQUITY TECHNOLOGY INTERNATIONAL
FUND FUND FUND FUND FUND
None None None None None
None None None None None
None None None None None
None None None None None
None None None None None
0.26% 0.63% 0.62% 0.45% 0.98%
None None None None None
0.59% 0.22% 0.28% 0.45% 0.77%
0.85% 0.85% 0.90% 0.90% 1.75%
$ 9 $ 9 $ 9 $ 9 $ 18
$ 27 $ 27 $ 29 $ 29 $ 55
$ 47 $ 47 $ 50 $ 50 $ 95
$ 105 $ 105 $ 111 $ 111 $ 206
</TABLE>
(1) The Adviser and the Administrator intend to waive a portion of their fees
and/or reimburse expenses on a voluntary basis, and the amounts shown
reflect these waivers and reimbursements as of the date of this Prospectus.
Each of these persons intends to maintain such waivers and reimbursements
in effect for the current fiscal year but reserves the right to discontinue
such waivers and reimbursements at any time in its sole discretion. Absent
any fee waivers, investment advisory fees as an annualized percentage of
average daily net assets would be 0.70% for each Fund except International
Fund, as to which they would be 1.25%; and total fund operating expenses
calculated on such basis would be 0.95% for Stock Fund, 0.98% for Equity
Index Fund, 0.99% for Balanced Fund, 1.38% for Limited Volatility Stock
Fund, 1.04% for Asset Allocation Fund, 1.14% for Equity Income Fund, 1.08%
for Diversified Growth Fund, 2.59% for Emerging Growth Fund, 1.00% for
Regional Equity Fund, 0.98% for Special Equity Fund, 3.12% for Technology
Fund and 2.05% for International Fund. Other expenses includes an
administration fee and is based on estimated amounts for the current fiscal
year.
(2) Absent the fee waivers and reimbursements referred to in (1) above, the
dollar amounts for the 1, 3, 5 and 10-year periods would be as follows:
Stock Fund, $10, $30, $53 and $117; Equity Index Fund, $10, $31, $54 and
$120; Balanced Fund, $10, $32, $55 and $121; Limited Volatility Stock Fund,
$14, $44, $76 and $166; Asset Allocation Fund, $11, $33, $57 and $127;
Equity Income Fund; $12, $36, $63 and $139; Diversified Growth Fund, $11,
$34, $60 and $132; Emerging Growth Fund, $26, $81, $138 and $292; Regional
Equity Fund, $10, $32, $55 and $122; Special Equity Fund, $10, $31, $54 and
$120; Technology Fund, $31, $96, $164 and $343; and International Fund,
$21, $64, $110 and $238.
INFORMATION CONCERNING FEES AND EXPENSES
The purpose of the preceding tables is to assist the investor in understanding
the various costs and expenses that an investor in a Fund may bear directly or
indirectly. THE EXAMPLES CONTAINED IN THE TABLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. The information set forth in the foregoing tables and
examples relates only to the Class C Shares of the Funds. The Funds also offer
Class A and Class B Shares which are subject to the same expenses and, in
addition, to a front-end or contingent deferred sales load and certain
distribution expenses.
The examples in the above tables are based on projected annual Fund operating
expenses after voluntary fee waivers and expense reimbursements by the Adviser
and the Administrator. Although these persons intend to maintain such waivers in
effect for the current fiscal year, any such waivers are voluntary and may be
discontinued at any time. Prior to fee waivers, investment advisory fees accrue
at the annual rate as a percentage of average daily net assets of 0.70% for each
of the Funds except International Fund, as to which they are 1.25%.
Other expenses include fees paid by each Fund to the Administrator for providing
various services necessary to operate the Funds. These include shareholder
servicing and certain accounting and other services. The Administrator provides
these services for a fee calculated at an annual rate of 0.12% of average daily
net assets of each Fund subject to a minimum of $50,000 per Fund per fiscal
year; provided, that to the extent that the aggregate net assets of all First
American funds exceed $8 billion, the percentage stated above is reduced to
0.105%. Other expenses of the Funds also includes the cost of maintaining
shareholder records, furnishing shareholder statements and reports, and other
services. Investment advisory fees, administrative fees and other expenses are
reflected in the Funds' daily dividends and are not charged to individual
shareholder accounts.
FINANCIAL HIGHLIGHTS
The following audited financial highlights should be read in conjunction with
the Funds' financial statements, the related notes thereto and the independent
auditors' report appearing in the Statement of Additional Information. The
Financial Highlights for the Class A shares of the Funds have been provided
below along with the Financial Highlights for Class C shares. Class A shares are
subject to sales charges and fees that may differ from those applicable to Class
C shares.
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
UNREALIZED DIVIDENDS
NET ASSET VALUE NET GAINS OR FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT FROM CAPITAL VALUE END END OF
PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK FUND
Class C
1994(1) $16.47 $0.25 $ 0.03 $(0.25) $ -- $16.50 1.70%+ $154,949
Class A
1994 $16.00 $0.31 $ 1.00 $(0.30) $(0.50) $16.51 8.35% $ 8,421
1993 14.04 0.22 1.99 (0.23) (0.02) 16.00 15.82% 134,186
1992 13.62 0.24 0.81 (0.29) (0.34) 14.04 7.88% 3,644
1991(2) 10.64 0.28 2.95 (0.22) (0.03) 13.62 30.49%+ 2,386
1990(3) 12.09 0.25 (1.17) (0.25) (0.28) 10.64 (8.22)% 1,161
1989(3) 10.35 0.25 1.70 (0.20) (0.01) 12.09 20.33% 323
1988(3)(4) 10.03 0.27 0.35 (0.30) -- 10.35 6.40%+ 206
EQUITY INDEX FUND
Class C
1994(1) $10.85 $0.20 $(0.18) $(0.20) $ -- $10.67 0.18%+ $163,688
Class A
1994 $10.60 $0.25 $ 0.09 $(0.25) $(0.01) $10.68 3.25% $ 758
1993(5) 10.00 0.20 0.60 (0.20) -- 10.60 8.02%+ 139,957
BALANCED FUND
Class C
1994(1) $10.86 $0.25 $(0.32) $(0.25) $ -- $10.54 (0.64)%+ $125,285
Class A
1994 $10.73 $0.34 $(0.02) $(0.34) $(0.17) $10.54 3.02% $ 13,734
1993(5) 10.00 0.28 0.75 (0.28) (0.02) 10.73 10.39%+ 111,225
ASSET ALLOCATION FUND
Class C
1994(1) $10.68 $0.20 $(0.30) $(0.20) $ -- $10.38 (0.90)%+ $ 47,227
Class A
1994 $10.60 $0.27 $(0.08) $(0.26) $(0.14) $10.39 1.81% $ 707
1993(5) 10.00 0.19 0.60 (0.19) -- 10.60 8.01%+ 56,393
EQUITY INCOME FUND
Class C
1994(6) $ 9.90 $0.07 $(0.03) $(0.05) $ -- $ 9.89 0.45%+ $ 17,489
Class A
1994(7) $ 9.87 $0.41 $ -- $(0.39) $ -- $ 9.89 4.22%+ $ 1,852
1993(8)(9) 10.00 0.57 (0.14) (0.56) $ -- 9.87 4.44%+ 28,786
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE NET
EXPENSES TO INCOME TO ASSETS
AVERAGE NET AVERAGE NET (EXCLUDING PORTFOLIO TURNOVER
ASSETS ASSETS WAIVERS) RATE
0.75% 2.28% 1.01% 65%
0.76% 1.51% 1.20% 65%
0.75 1.94 1.28 48
1.45 1.75 4.46 39
1.45 2.47 7.42 76
1.45 2.24 9.47 41
1.24 2.26 36.39 74
1.02 2.67 28.60 80
0.35% 2.59% 1.03% 11%
0.35% 2.23% 1.23% 11%
0.35 2.52 1.30 1
0.75% 3.51% 1.05% 98%
0.77% 2.63% 1.24% 98%
0.75 3.31 1.29 77
0.75% 2.91% 1.12% 32%
0.75% 2.01% 1.29% 32%
0.75 2.40 1.34 31
0.75% 5.61% 1.14% 108%
0.88% 4.88% 1.39% 108%
0.75 6.09 1.36 68
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
* Represents distributions in excess of net realized gains.
(1) Class C shares have been offered since February 4, 1994. All ratios for the
period have been annualized.
(2) On September 3, 1991, the Board of Directors of FAIF approved a change in
FAIF's fiscal year end from October 31 to September 30, effective September
30, 1991. All ratios for the period have been annualized.
(3) For the period ended October 31.
(4) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(5) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(6) Class C shares have been offered since August 2, 1994. All ratios for the
period have been annualized.
(7) Prior to March 28, 1994, these funds were advised by Boulevard Bank
National Association. On April 28, 1994 the Board of Directors approved a
change in the fiscal year end from November 30 to September 30, effective
September 30, 1994. All ratios for the period have been annualized.
(8) For the period ended November 30.
(9) Commenced operations on December 18, 1992. All ratios for the period have
been annualized.
(10) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(11) Class A shares have been offered since April 7, 1994. All ratios for the
period have been annualized.
FINANCIAL HIGHLIGHTS (CONTINUED)
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
UNREALIZED DIVIDENDS
NET ASSET VALUE NET GAINS OR FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT FROM CAPITAL VALUE END END OF
PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DIVERSIFIED GROWTH FUND
Class C
1994(6) $ 8.92 $ 0.03 $ 0.18 $(0.03) $ -- $ 9.10 2.36%+ $ 31,875
Class A
1994(7) $ 9.39 $ 0.10 $(0.29) $(0.11) $ -- $ 9.09 (2.07)%+ $ 1,900
1993(8)(9) 10.00 0.11 (0.63) (0.09) $ -- 9.39 (5.18)%+ 31,084
EMERGING GROWTH FUND
CLASS C
1994(10) $10.00 $ 0.01 $ 0.56 $(0.01) $ -- $10.56 5.68%+ $ 6,849
CLASS A
1994(10) $10.00 $ 0.01 $ 0.57 $(0.01) $ -- $10.57 5.88%+ $ 91
REGIONAL EQUITY FUND
CLASS C
1994(1) $12.41 $ 0.07 $ 0.11 $(0.07) $ -- $12.52 1.46%+ $ 96,045
CLASS A
1994 $11.96 $ 0.08 $ 0.71 $(0.07) $(0.16) $12.52 6.76% $ 8,345
1993(5) 10.00 0.05 1.96 (0.05) -- 11.96 20.17%+ 58,427
SPECIAL EQUITY FUND
CLASS C
1994(1) $16.34 $ 0.22 $ 0.96 $(0.22) $ -- $17.30 7.31%+ $128,806
CLASS A
1994 $15.81 $ 0.28 $ 2.52 $(0.28) $(1.03) $17.30 18.70% $ 7,333
1993 13.61 0.23 2.32 (0.25) (0.10) 15.81 18.91% 81,899
1992 12.98 0.21 1.61 (0.27) (0.92) 13.61 15.17% 3,586
1991(2) 10.33 0.30 2.61 (0.26) -- 12.98 28.38%+ 3,423
1990(3) 12.96 0.47 (2.03) (0.46) (0.61) 10.33 (13.24)% 2,761
1989(3) 11.55 0.47 1.39 (0.41) (0.04) 12.96 17.41% 2,000
1988(3)(4) 10.03 0.34 1.57 (0.39) -- 11.55 19.56%+ 578
TECHNOLOGY FUND
CLASS C
1994(10) $10.00 $(0.01) $ 1.19 $ -- $ -- $11.19 11.90%+ $ 6,491
CLASS A
1994(10) $10.00 $(0.01) $ 1.20 $ -- $ -- $11.19 11.90%+ $ 61
INTERNATIONAL FUND
CLASS C
1994(10) $10.00 $(0.01) $ 0.23 $ -- $ -- $10.22 2.20%+ $ 47,963
CLASS A
1994(11) $ 9.98 $(0.01) $ 0.24 $ -- $ -- $10.21 2.30%+ $ 464
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE NET
EXPENSES TO INCOME TO ASSETS
AVERAGE NET AVERAGE NET (EXCLUDING PORTFOLIO TURNOVER
ASSETS ASSETS WAIVERS) RATE
0.75% 2.37% 1.08% 101%
0.90% 1.15% 1.33% 101%
0.78 1.26 1.25 5
0.80% 0.23% 2.59% 19%
0.79% 0.23% 2.84% 19%
0.80% 0.82% 1.05% 41%
0.82% 0.59% 1.25% 41%
0.80 0.59 1.30 28
0.79% 1.93% 1.03% 116%
0.81% 1.88% 1.23% 116%
0.81 2.07 1.31 104
1.50 1.61 4.18 146
1.50 2.60 5.13 116
1.50 4.09 4.21 113
1.38 4.07 8.68 102
1.20 4.02 15.60 51
0.80% (0.21)% 3.12% 43%
0.80% (0.21)% 3.37% 43%
1.75% (0.19)% 2.05% 16%
1.75% (0.26)% 2.30% 16%
</TABLE>
THE FUNDS
FAIF is an open-end management investment company which offers shares in several
different mutual funds (collectively, the "FAIF Funds"), each of which evidences
an interest in a separate and distinct investment portfolio. Shareholders may
purchase shares in each FAIF Fund through three separate classes (Class A, Class
B and Class C) which provide for variations in distribution costs, voting rights
and dividends. Except for these differences among classes, each share of each
FAIF Fund represents an undivided proportionate interest in that fund. FAIF is
incorporated under the laws of the State of Maryland, and its principal offices
are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087.
This Prospectus relates only to the Class C Shares of the Funds named on the
cover hereof. Information regarding the Class A and Class B Shares of these
Funds and regarding the Class A, Class B and Class C Shares of the other FAIF
Funds is contained in separate prospectuses that may be obtained from FAIF's
Distributor, SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087, or by calling (800) 637-2548. The Board of Directors of FAIF
may authorize additional series or classes of common stock in the future.
INVESTMENT OBJECTIVES AND POLICIES
This section describes the investment objectives and policies of the Funds.
There is no assurance that any of these objectives will be achieved. The Funds'
investment objectives are not fundamental and therefore may be changed without a
vote of shareholders. Such changes could result in a Fund having investment
objectives different from those which shareholders considered appropriate at the
time of their investment in a Fund. Shareholders will receive written
notification at least 30 days prior to any change in a Fund's investment
objectives. Each of the Funds except Technology Fund is a diversified investment
company, as defined in the Investment Company Act of 1940 (the "1940 Act").
Technology Fund is a non-diversified company under the 1940 Act.
If a percentage limitation on investments by a Fund stated below or in the
Statement of Additional Information is adhered to at the time of an investment,
a later increase or decrease in percentage resulting from changes in asset
values will not be deemed to violate the limitation. A Fund which is limited to
investing in securities with specified ratings is not required to sell a
security if its rating is reduced or discontinued after purchase, but the Fund
may consider doing so. However, except in the case of Equity Income Fund, in no
event will more than 5% of any Fund's net assets be invested in non-investment
grade securities. Descriptions of the rating categories of Standard & Poor's
Corporation ("Standard & Poor's") and Moody's Investors Service, Inc.
("Moody's") are contained in the Statement of Additional Information.
When the term "equity securities" is used in this Prospectus, it refers to
common stock and securities which are convertible into or exchangeable for, or
which carry warrants or other rights to acquire, common stock.
This section also contains information concerning certain investment risks borne
by Fund shareholders under the heading "-- Risks to Consider." Further
information concerning the securities in which the Funds may invest and related
matters is set forth under "Special Investment Methods."
STOCK FUND
OBJECTIVES. Stock Fund has a primary objective of capital appreciation. A
secondary objective of the Fund is to provide current income.
INVESTMENT POLICIES. Under normal market conditions, Stock Fund invests at least
80% of its total assets in equity securities (and at least 65% in common stocks)
diversified among a broad range of industries and among companies that have a
market capitalization of at least $500 million. In selecting equity securities,
the Adviser employs a value-based selection discipline. The Adviser anticipates
investing in equity securities of companies it believes are selling at less than
fair value and offer the potential for appreciation as a result of improved
profitability reflecting corporate restructuring or elimination of unprofitable
operations, change in management or management goals, or improving demand for
the companies' goods or services.
The Fund also may invest up to 20% of its total assets in the aggregate in
equity securities of issuers with a market capitalization of less than $500
million and in fixed income securities of the kinds described under "Special
Investment Methods -- Fixed Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary
Receipts. For information about these kinds of investments and certain
associated risks, see "Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
EQUITY INDEX FUND
OBJECTIVE. Equity Index Fund has an objective of providing investment results
that correspond to the performance of the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500").
INVESTMENT POLICIES. Equity Index Fund invests substantially (at least 65% of
total assets) in common stocks included in the S&P 500. The Adviser believes
that the Fund's objective can best be achieved by investing in the common stocks
of approximately 250 to 500 of the issues included in the S&P 500, depending on
the size of the Fund.
Standard & Poor's designates the stocks included in the S&P 500 on a statistical
basis. A particular stock's weighting in the S&P 500 is based on its total
market value (that is, its market price per share times the number of shares
outstanding) relative to that of all stocks included in the S&P 500. From time
to time, Standard & Poor's may add or delete stocks to or from the S&P 500.
Inclusion of a particular stock in the S&P 500 does not imply any opinion by
Standard & Poor's as to its merits as an investment, nor is Standard & Poor's a
sponsor of or in any way affiliated with the Fund.
The Fund is managed by utilizing a computer program that identifies which stocks
should be purchased or sold in order to replicate, as closely as possible, the
composition of the S&P 500. The Fund includes a stock in its investment
portfolio in the order of the stock's weighting in the S&P 500, starting with
the most heavily weighted stock. Thus, the proportion of Fund assets invested in
a stock or industry closely approximates the percentage of the S&P 500
represented by that stock or industry. Portfolio turnover is expected to be well
below that of actively managed mutual funds.
Although the Fund will not duplicate the S&P 500's performance precisely, it is
anticipated that there will be a close correlation between the Fund's
performance and that of the S&P 500 in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the S&P 500 of at least 95%, without taking into account expenses of
the Fund. A perfect correlation would be indicated by a figure of 100%, which
would be achieved if the Fund's net asset value, including the value of its
dividends and capital gains distributions, increased or decreased in exact
proportion to changes in the S&P 500. The Fund's ability to replicate the
performance of the S&P 500 may be affected by, among other things, changes in
securities markets, the manner in which Standard & Poor's calculates the S&P
500, and the amount and timing of cash flows into and out of the Fund. Although
cash flows into and out of the Fund will affect the Fund's portfolio turnover
rate and its ability to replicate the S&P 500's performance, investment
adjustments will be made, as practicably as possible, to account for these
circumstances.
The Fund also may invest up to 20% of its total assets in the aggregate in stock
index futures contracts, options on stock indices, options on stock index
futures, and index participation contracts based on the S&P 500. The Fund will
not invest in these types of contracts and options for speculative purposes, but
rather to maintain sufficient liquidity to meet redemption requests; to increase
the level of Fund assets devoted to replicating the composition of the S&P 500;
and to reduce transaction costs. These types of contracts and options and
certain associated risks are described under "Special Investment Methods --
Options Transactions."
In order to maintain liquidity during times of unusual market conditions, the
Fund also may invest temporarily in cash and cash items of the kinds described
under "Special Investment Methods -- Cash Items."
BALANCED FUND
OBJECTIVE. Balanced Fund has an objective of maximizing total return (capital
appreciation plus income).
INVESTMENT POLICIES. Balanced Fund seeks to achieve its objective by investing
in a balanced portfolio of equity securities and fixed income securities. The
asset mix of the Fund normally will range between 40% and 75% equity securities,
between 25% and 60% fixed income securities (including only that portion of the
value of convertible securities attributable to their fixed income
characteristics), and between 0% and 25% money market instruments. Over the long
term, it is anticipated that the Fund's asset mix will average approximately 60%
equity securities and 40% fixed income securities. The Adviser may make moderate
shifts among asset classes in order to attempt to increase returns or reduce
risk.
With respect to the equity security portion of the Fund's portfolio, the Adviser
follows the same investment policies as are described above under "-- Stock Fund
- -- Investment Policies."
The fixed income portion of the Fund's portfolio is invested in investment grade
debt securities, at least 65% of which are United States Government obligations
and corporate debt obligations and mortgage-related securities rated at least A
by Standard & Poor's or Moody's or which have been assigned an equivalent rating
by another nationally recognized statistical rating organization. Under normal
market conditions, the weighted average maturity of the fixed income securities
held by the Fund will not exceed 15 years.
The Fund's permitted fixed income investments include notes, bonds and discount
notes of United States Government agencies or instrumentalities; domestic issues
of corporate debt obligations having floating or fixed rates of interest and
rated at least BBB by Standard & Poor's or Baa by Moody's, or which have been
assigned an equivalent rating by another nationally recognized statistical
rating organization, or which are of comparable quality in the judgment of the
Adviser; other investments, including mortgage-backed securities, which are
rated in one of the four highest categories by a nationally recognized
statistical rating organization or which are of comparable quality in the
judgment of the Adviser; and commercial paper which is rated A-1 by Standard &
Poor's or P-1 by Moody's or which has been assigned an equivalent rating by
another nationally recognized statistical rating organization. Unrated
securities will not exceed 10% in the aggregate of the value of the total fixed
income securities held by the Fund.
Subject to the foregoing limitations, the fixed income securities in which the
Fund may invest include (i) mortgage-backed securities (provided that the Fund
will not invest more than 10% of its total fixed income assets in interest-only,
principal-only or inverse floating rate mortgage-backed securities); (ii)
asset-backed securities; and (iii) bank instruments. In addition, the Fund may
invest up to 15% of its total fixed income assets in foreign securities payable
in United States dollars. For information about these kinds of investments and
certain associated risks, see the related headings under "Special Investment
Methods," and for information concerning certain risks associated with investing
in fixed income securities generally, see "Special Investment Methods -- Fixed
Income Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; (v) engage in the lending of portfolio securities;
(vi) in order to attempt to reduce risk, invest in exchange traded put and call
options on interest rate futures contracts and on interest rate indices; and
(vii) in order attempt to to reduce risk, write covered call options on interest
rate indices. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
LIMITED VOLATILITY STOCK FUND
OBJECTIVES. Limited Volatility Stock Fund has a primary objective of maximizing
total return (capital appreciation plus income) within the constraint of
controlling the volatility of the Fund to a level below that of the major market
indices such as the S&P 500 and the Dow Jones Industrial Average. In this
respect, the Fund seeks to maintain a five year historical performance relative
to the S&P 500 at a beta level no greater than .95. A secondary objective of the
Fund is to provide current income at a level that exceeds that of the S&P 500.
INVESTMENT POLICIES. Under normal market conditions, Limited Volatility Stock
Fund invests a minimum of 80% of its total assets in equity securities (and at
least 65% in common stocks) diversified among a broad range of industries and
among companies that have a market capitalization of at least $500 million. The
Adviser's primary considerations when acquiring equity securities for the Fund
include their potential for total return as a result of factors such as product
development and demand, favorable operating ratios, resources for expansion,
management abilities, reasonableness of market price, and favorable overall
business prospects, along with the issue's ability to contribute to controlling
portfolio volatility. Receipt of dividends or interest will be a secondary, but
still important, concern. For example, when equity securities appear to have
similar potentials for total return, the Adviser may base its investment
decision upon which security has the greater dividend or interest yield.
Nevertheless, securities acquired by the Fund are not required to pay dividends
or earn interest.
The Fund also may invest up to 20% of its total assets in the aggregate in
equity securities of issuers with a market capitalization of less than $500
million and in fixed income securities of the kinds described under "Special
Investment Methods -- Fixed Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts. For
information about these kinds of investments and certain associated risks, see
"Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
ASSET ALLOCATION FUND
OBJECTIVE. Asset Allocation Fund has an objective of maximizing total return
over the long term by allocating its assets principally among common stocks,
bonds, and short-term instruments.
INVESTMENT POLICIES. Asset Allocation Fund allocates its investments principally
among (i) common stocks included in the S&P 500, (ii) direct obligations of the
United States Treasury, and (iii) short-term instruments. There are no
limitations on the proportions in which the Adviser may allocate the Fund's
investments among these three classes of assets. The Fund thus is not a
"balanced" fund, in that it is not required to allocate its investments in
specific proportions or ranges among these asset classes.
The Adviser regularly reviews the Fund's investment allocation and varies the
allocation to emphasize the asset class or classes that, in the Adviser's
then-current judgment, provide the most favorable total return outlook. There is
no limitation on the amount that may be invested in any one asset class, and the
Fund may at times be fully invested in a single asset class if the Adviser
believes that it offers the most favorable total return outlook.
In making asset allocation decisions, the Adviser utilizes a proprietary
quantitative model which predicts future asset class returns based on historical
experience using probability theory. By investing in common stocks intended to
approximate the total return of the S&P 500, as described below, the Adviser
attempts to minimize the risk of individual equity security selection in the
common stock class. By limiting the bond class to direct obligations of the
United States Treasury, the Adviser attempts to eliminate credit risk from this
class.
Within the common stock asset class, the Adviser seeks to produce a total return
approximating that of the S&P 500. In order to achieve this result, the Adviser
follows the same indexing-based policies for this asset class as are described
above under "-- Equity Index Fund -- Investment Policies."
Within the bond asset class, the Fund may invest in any maturity of direct
obligations of the United States Treasury. The Adviser thus has discretion in
determining the weighted average maturity of the investments within this asset
class. For information concerning certain risks associated with investing in
fixed income securities generally, see "Special Investment Methods -- Fixed
Income Securities."
Within the short-term asset class, the Fund may hold cash or invest in cash
items of the kinds described under "Special Investment Methods--Cash Items."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) purchase securities on a when-issued or delayed-delivery
basis; (iv) engage in the lending of portfolio securities; (v) in order to
attempt to reduce risk, invest in exchange traded put and call options on
interest rate futures contracts and on interest rate indices; and (vi) in order
to manage allocations among asset classes efficiently, invest in interest rate
and stock index futures. For information about these investment methods and
certain associated risks, see the related headings under "Special Investment
Methods."
EQUITY INCOME FUND
OBJECTIVE. Equity Income Fund has an objective of long-term growth of capital
and income.
INVESTMENT POLICIES. Under normal market conditions, Equity Income Fund invests
at least 80% of its total assets in equity securities of issuers believed by the
Adviser to be characterized by sound management, the ability to finance expected
growth and the ability to pay above average dividends.
The Fund invests in equity securities that have relatively high dividend yields
and which, in the Adviser's opinion, will result in a relatively stable Fund
dividend with a growth rate sufficient to maintain the purchasing power of the
income stream. Although the Adviser anticipates that higher yielding equity
securities will generally represent the core holdings of the Fund, the Fund may
invest in lower yielding but higher growth equity securities to the extent that
the Adviser believes such investments are appropriate to achieve portfolio
balance. All securities held by the Fund will provide current income consistent
with the Fund's investment objective.
The "equity securities" in which the Fund may invest include corporate debt
obligations which are convertible into common stock. These convertible debt
obligations may include obligations rated at the time of purchase as low as CCC
by Standard & Poor's or Caa by Moody's, or which have been assigned an
equivalent rating by another nationally recognized statistical rating
organization, or which are of comparable quality in the judgment of the Adviser.
Debt obligations rated less than BBB by Standard & Poor's or Baa by Moody's are
considered to be less than "investment grade" and are sometimes referred to as
"junk bonds." Obligations rated CCC by Standard & Poor's or Caa by Moody's are
considered to be of poor standing and are predominantly speculative.
Descriptions of Standard & Poor's and Moody's rating categories are contained in
the Statement of Additional Information. If the rating of an obligation is
reduced below the categories set forth above after purchase or is discontinued,
the Fund is not required to sell the obligation but may consider doing so.
Purchases of less than investment grade convertible debt obligations are
intended to advance the Fund's objective of long-term growth of capital through
the "upside" potential of the obligations' conversion features and to advance
the Fund's objective of income through receipt of interest payable on the
obligations. The Fund will not invest more than 25% of its total assets in
convertible debt obligations which are rated less than investment grade or which
are of comparable quality in the judgment of the Adviser. For the year ended
September 30, 1994, the following weighted average percentages of the Fund's
total assets were invested in convertible and nonconvertible debt obligations
with the indicated Standard & Poor's ratings or their equivalents: AAA, 0%; AA,
0%; A, 0%; BBB, 6%; BB, 0%; B, 5%; and CCC, 0%.
Debt obligations which are rated less than investment grade generally are
subject to greater market fluctuations and greater risk of loss of income and
principal due to default by the issuer than are higher-rated obligations. The
value of these obligations tends to reflect short-term corporate, economic,
interest rate and market developments and investor perceptions of the issuer's
credit quality to a greater extent than investment grade obligations. In
addition, since the market for these obligations is relatively new and does not
have as many participants as the market for higher-rated obligations, it may be
more difficult to dispose of or to determine the value of these obligations. In
the case of a convertible debt obligation, these risks may be present in a
greater degree where the principal amount of the obligation is greater than the
current market value of the common stock into which it is convertible.
The Fund also may invest up to 20% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods--Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts. For
information about these kinds of investments and certain associated risks, see
"Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods, see the related
headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
DIVERSIFIED GROWTH FUND
OBJECTIVES. Diversified Growth Fund has a primary objective of long-term growth
of capital. A secondary objective of the Fund is to provide current income.
INVESTMENT POLICIES. Under normal market conditions, Diversified Growth Fund
invests at least 80% of its total assets in equity securities of a diverse group
of companies that will provide representation across all economic sectors
included in the S&P 500. The Adviser may overweight the Fund's portfolio
holdings in sectors that it believes provide above average total return
potential and may underweight the Fund's holdings in those sectors that it
believes have a lower total return potential. Within a given sector, the Fund's
assets are invested in securities of those companies that, in the Adviser's
judgment, exhibit a combination of above average growth in revenue and earnings,
strong management and sound and improving financial condition.
The Fund also may invest up to 20% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods--Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts. For
information about these kinds of investments and certain associated risks, see
"Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
EMERGING GROWTH FUND
OBJECTIVE. Emerging Growth Fund has an objective of growth of capital.
INVESTMENT POLICIES. Under normal market conditions, Emerging Growth Fund
invests at least 65% of its total assets in equity securities of small-sized
companies that exhibit, in the Adviser's opinion, outstanding potential for
superior growth. For these purposes, small-sized companies are deemed those with
market capitalizations of less than $1 billion. Companies that participate in
sectors that are identified by the Adviser as having long-term growth potential
generally are expected to make up a substantial portion of the Fund's holdings.
These companies often have established a market niche or have developed unique
products or technologies that are expected by the Adviser to produce superior
growth in revenues and earnings.
The Fund also may invest up to 35% of its total assets in the aggregate in
equity securities of issuers with a market capitalization of $1 billion or more
and in fixed income securities of the kinds described under "Special Investment
Methods -- Fixed Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts. For
information about these kinds of investments and certain associated risks, see
"Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
REGIONAL EQUITY FUND
OBJECTIVE. Regional Equity Fund has an objective of capital appreciation.
INVESTMENT POLICIES. Regional Equity Fund seeks to achieve its objective by
investing, in normal market conditions, at least 65% of its total assets in
equity securities of small-sized companies headquartered in Minnesota, North and
South Dakota, Montana, Wisconsin, Michigan, Iowa, Nebraska, Colorado and
Illinois.
The Adviser anticipates investing primarily in the securities of rapidly growing
small-sized companies which generally will have the following characteristics,
in the Adviser's opinion: (i) some kind of sustainable uniqueness that will
allow the company to grow, (ii) highly skilled management, and (iii)
undervaluation by the market. For these purposes, small-sized companies are
deemed those with market capitalizations of less than $1 billion.
In addition to the risks associated with investing in smaller-capitalization
companies, see "-- Risk Factors--Smaller-Capitalization Companies" below, the
Fund's policy of concentrating its equity investments in a geographic region
means that it will be subject to adverse economic, political or other
developments in that region. Although the region in which the Fund principally
invests has a diverse industrial base (including, but not limited to,
agriculture, mining, retail, transportation, utilities, heavy and light
manufacturing, financial services, insurance, computer technology and medical
technology), this industrial base is not as diverse as that of the country as a
whole. The Fund therefore may be less diversified by industry and company than
other funds with a similar investment objective and no geographic limitation.
The Fund also may invest up to 35% of its total assets in the aggregate in
equity securities without regard to the location of the issuer's headquarters or
the issuer's market capitalization and in fixed income securities of the kinds
described under "Special Investment Methods--Fixed Income Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
SPECIAL EQUITY FUND
OBJECTIVE. Special Equity Fund has an objective of capital appreciation.
INVESTMENT POLICIES. Under normal market conditions, Special Equity Fund invests
at least 65% of its total assets in equity securities. The Fund's policy is to
invest in equity securities which the Adviser believes offer the potential for
greater than average capital appreciation. The Adviser believes that this policy
can best be achieved by investing in the equity securities of companies where
fundamental changes are occurring, are likely to occur, or have occurred and
where, in the opinion of the Adviser, the changes have not been adequately
reflected in the price of the securities and thus are considered by the Adviser
to be undervalued.
Undervalued securities may include securities of companies which (i) have been
unpopular for some time but where, in the Adviser's opinion, recent developments
(such as those listed in the next sentence) suggest the possibility of improved
operating results; (ii) have recently experienced marked popularity but which,
in the opinion of the Adviser, have temporarily fallen out of favor for reasons
that are considered by the Adviser to be non-recurring or short-term; and (iii)
appear to the Adviser to be undervalued in relation to popular securities of
other companies in the same industry. Typically, but not exclusively, the
Adviser will consider investing in undervalued issues in which it sees the
possibility of substantially improved market price due to increasing demand for
an issuer's products or services, the development of new or improved products or
services, the probability of increased operating efficiencies, the elimination
of unprofitable products or operations, changes in management or management
goals, fundamental changes in the industry in which the issuer operates, new or
increased emphasis on research and development, or possible mergers or
acquisitions.
In selecting securities judged to be undervalued and in investing in potential
"turnaround" situations, the Adviser will be acting on opinions and exercising
judgments which may be contrary to those of the majority of investors. These
opinions and judgments involve the risks of either (i) a correct judgment by the
majority, in which case losses may be incurred or profits may be limited, or
(ii) a long delay before majority recognition of the accuracy of the Adviser's
judgment, in which case capital invested by the Fund in an individual security
or group of securities may be nonproductive for an extended period.
The Fund also may invest up to 35% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods--Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts. For
information about these kinds of investments and certain associated risks, see
"Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
TECHNOLOGY FUND
OBJECTIVE. Technology Fund has an objective of long-term growth of capital.
INVESTMENT POLICIES. Under normal market conditions, Technology Fund invests at
least 80% of its total assets in equity securities. The Fund anticipates
investing in companies which the Adviser believes have, or will develop,
products, processes or services that will provide or will benefit significantly
from technological advances and improvements. The description of the technology
sector is interpreted broadly by the Adviser and may include such products or
services as inexpensive computing power, such as personal computers; improved
methods of communications, such as satellite transmission; or labor saving
machines or instruments, such as computer-aided design equipment. The prime
emphasis of the Fund is to identify those companies positioned, in the Adviser's
opinion, to benefit from technological advances in areas such as semiconductors,
minicomputers and peripheral equipment, scientific instruments, computer
software, communications, and future automation trends in both office and
factory settings.
The Fund also may invest up to 20% of its total assets in fixed income
securities of the kinds described under "Special Investment Methods--Fixed
Income Securities."
Subject to the limitations stated above, the Fund may invest up to 25% of its
total assets in securities of foreign issuers which are either listed on a
United States stock exchange or represented by American Depositary Receipts. For
information about these kinds of investments and certain associated risks, see
"Special Investment Methods -- Foreign Securities."
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 25% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; and (v) engage in the lending of portfolio
securities. For information about these investment methods and certain
associated risks, see the related headings under "Special Investment Methods."
For temporary defensive purposes during times of unusual market conditions, the
Fund may without limitation hold cash or invest in cash items of the kinds
described under "Special Investment Methods -- Cash Items." The Fund also may
invest not more than 35% of its total assets in cash and cash items in order to
utilize assets awaiting normal investment.
Technology Fund operates as a non-diversified investment company, as defined in
the 1940 Act, but intends to conduct its operations so as to qualify as a
regulated investment company for purposes of the Internal Revenue Code of 1986,
as amended. Since a relatively high percentage of the assets of the Fund may be
invested in the securities of a limited number of issuers which will be in the
same or related economic sectors, the Fund's portfolio securities may be more
susceptible to any single economic, technological or regulatory occurrence than
the portfolio securities of diversified investment companies. In addition,
competitive pressures may have a significant effect on the financial condition
of companies in the technology industry. For example, if technology continues to
advance at an accelerated rate, and the number of companies and product
offerings continue to expand, these companies could become increasingly
sensitive to short product cycles and aggressive pricing.
INTERNATIONAL FUND
OBJECTIVE. International Fund has an objective of long-term growth of capital.
INVESTMENT POLICIES. Under normal market conditions, International Fund invests
at least 65% of its total assets in an internationally diversified portfolio of
equity securities which trade in markets other than the United States. Generally
these securities are issued by companies (i) domiciled in countries other than
the United States, or (ii) that derive at least 50% of either their revenues or
their pre-tax income from activities outside of the United States. The
securities in which the Fund invests include common and preferred stock,
securities (bonds and preferred stock) convertible into common stock, warrants
and securities representing underlying international securities such as American
Depositary Receipts and European Depositary Receipts. The Fund also may hold
securities of other investment companies (which investments are also subject to
the advisory fee) and depositary or custodial receipts representing beneficial
interests in any of the foregoing securities.
The Fund may invest in securities of issuers in, but not limited to, Argentina,
Australia, Austria, Belgium, Canada, Chile, Columbia, Denmark, Finland, France,
Germany, Hong Kong, India, Ireland, Israel, Italy, Japan, Korea, Malaysia,
Mexico, the Netherlands, New Zealand, Norway, Peru, the Philippines, Singapore,
Spain, Sweden, Switzerland, Taiwan, Thailand, the United Kingdom, and Venezuela.
Normally, the Fund will invest at least 65% of its total assets in securities
traded in at least three foreign countries, including the countries listed
above. It is possible, although not currently anticipated, that up to 35% of the
Fund's assets could be invested in United States companies.
In investing the Fund's assets, the Sub-Adviser expects to place primary
emphasis on country selection, followed by selection of industries or sectors
within or across countries and by selection of individual stocks corresponding
to the industries or sectors selected. Investments are expected to be made
primarily in developed markets and larger capitalization companies. However, the
Fund also may invest in emerging markets where smaller capitalization companies
are the norm.
In addition, the Fund may (i) enter into repurchase agreements; (ii) in order to
attempt to reduce risk, purchase put and call options on equity securities and
on stock indices; (iii) write covered call options covering up to 50% of the
equity securities owned by the Fund; (iv) purchase securities on a when-issued
or delayed-delivery basis; (v) engage in the lending of portfolio securities;
(vi) engage in foreign currency transactions; (vii) in order to attempt to
reduce risk, purchase put and call options on foreign currencies; (viii) write
covered call options on foreign currencies owned by the Fund; and (ix) enter
into contracts for the future purchase or delivery of securities, foreign
currencies, and indices, purchase or sell options on any such futures contracts
and engage in related closing transactions. For information about these
investment methods and certain associated risks, see the related headings under
"Special Investment Methods."
Under normal market conditions, it is expected that the Fund will be fully
invested in equity securities and related hedging instruments (except for
short-term investments of cash for liquidity purposes and pending investment).
However, for temporary defensive purposes during times of unusual market
conditions, the Fund may without limitation hold cash or invest in cash items of
the kinds described under "Special Investment Methods -- Cash Items."
International Fund is subject to special risks associated with investing in
foreign securities and to declines in net asset value resulting from changes in
exchange rates between the United States dollar and foreign currencies. These
risks are discussed under "Special Investment Methods--Foreign Securities" and
"-- Foreign Currency Transactions" elsewhere here. Because of the special risks
associated with foreign investing and the Sub-Adviser's ability to invest
substantial portions of the Fund's assets in a small number of countries, the
Fund may be subject to greater volatility than most mutual funds which invest
principally in domestic securities.
RISKS TO CONSIDER
An investment in any of the Funds involves certain risks in addition to those
noted above with respect to particular Funds. These include the following:
EQUITY SECURITIES GENERALLY. Market prices of equity securities generally, and
of particular companies' equity securities, frequently are subject to greater
volatility than prices of fixed income securities. Market prices of equity
securities as a group have dropped dramatically in a short period of time on
several occasions in the past, and they may do so again in the future. Each of
the Funds is subject to the risk of generally adverse equity markets.
SMALLER-CAPITALIZATION COMPANIES. Emerging Growth Fund and Regional Equity Fund
emphasize investments in companies with relatively small market capitalizations,
and the remaining Funds (excluding Equity Index Fund and Asset Allocation Fund)
are permitted to invest in equity securities of such companies. The equity
securities of smaller-capitalization companies frequently have experienced
greater price volatility in the past than those of larger-capitalization
companies, and they may be expected to do so in the future. To the extent that
the Funds invest in smaller-capitalization companies, they are subject to this
risk of greater volatility.
ACTIVE MANAGEMENT. All of the Funds other than Equity Index Fund are actively
managed to a greater or lesser degree by the Adviser or, in the case of
International Fund, the Sub-Adviser. The performance of these Funds therefore
will reflect in part the ability of the Adviser or Sub-Adviser to select
securities which are suited to achieving the Funds' investment objectives. Due
to their active management, these Funds could underperform other mutual funds
with similar investment objectives or the market generally.
OTHER. Investors also should review "Special Investment Methods" for information
concerning risks associated with certain investment techniques which may be
utilized by the Funds.
MANAGEMENT
The Board of Directors of FAIF has the primary responsibility for overseeing the
overall management and electing the officers of FAIF. Subject to the overall
direction and supervision of the Board of Directors, the Adviser acts as
investment adviser for and manages the investment portfolios of FAIF.
INVESTMENT ADVISER
First Bank National Association, 601 Second Avenue South, Minneapolis, Minnesota
55480, is the Funds' investment adviser. The Adviser has acted as an investment
adviser to FAIF since its inception in 1987 and has acted as investment adviser
to First American Funds, Inc. since 1982. As of December 31, 1994, the Adviser
was managing accounts with an aggregate value of over $23 billion. First Bank
System, Inc., 601 Second Avenue South, Minneapolis, Minnesota 55480, is the
holding company for the Adviser.
Each of the Funds other than International Fund has agreed to pay the Adviser
monthly fees calculated on an annual basis equal to 0.70% of its average daily
net assets. International Fund pays the Adviser a monthly fee calculated on the
same basis equal to 1.25% of its average daily net assets, out of which the
Adviser pays the Sub-Adviser's fee. The Adviser may, at its option, waive any or
all of its fees, or reimburse expenses, with respect to any Fund from time to
time. Any such waiver or reimbursement is voluntary and may be discontinued at
any time. The Adviser also may absorb or reimburse expenses of the Funds from
time to time, in its discretion, while retaining the ability to be reimbursed by
the Funds for such amounts prior to the end of the fiscal year. This practice
would have the effect of lowering a Fund's overall expense ratio and of
increasing yield to investors, or the converse, at the time such amounts are
absorbed or reimbursed, as the case may be.
While the advisory fee payable to the Adviser with respect to International Fund
is higher than the advisory fee paid by most mutual funds, the Adviser believes
it is comparable to that paid by many funds having similar investment objectives
and policies.
The Glass-Steagall Act generally prohibits banks from engaging in the business
of underwriting, selling or distributing securities and from being affiliated
with companies principally engaged in those activities. In addition,
administrative and judicial interpretations of the Glass-Steagall Act prohibit
bank holding companies and their bank and nonbank subsidiaries from organizing,
sponsoring or controlling registered open-end investment companies that are
continuously engaged in distributing their shares. Bank holding companies and
their bank and nonbank subsidiaries may serve, however, as investment advisers
to registered investment companies, subject to a number of terms and conditions.
Although the scope of the prohibitions and limitations imposed by the
Glass-Steagall Act has not been fully defined by the courts or the appropriate
regulatory agencies, the Funds have received an opinion from their counsel that
the Adviser is not prohibited from performing the investment advisory services
described above. In the event of changes in federal or state statutes or
regulations or judicial and administrative interpretations or decisions
pertaining to permissible activities of bank holding companies and their bank
and nonbank subsidiaries, the Adviser might be prohibited from continuing these
arrangements. In that event, it is expected that the Board of Directors would
make other arrangements and that shareholders would not suffer adverse financial
consequences.
SUB-ADVISER TO INTERNATIONAL FUND
Marvin & Palmer Associates, Inc., 1201 North Market Street, Suite 2300,
Wilmington, Delaware 19801, is Sub-Adviser to International Fund under an
agreement with the Adviser (the "Sub-Advisory Agreement"). The Sub-Adviser is
responsible for the investment and reinvestment of International Fund's assets
and the placement of brokerage transactions in connection therewith. For its
services under the Sub-Advisory Agreement, the Sub-Adviser is paid a monthly fee
by the Adviser calculated on an annual basis equal to 0.75% of the first $100
million of International Fund's average daily net assets, 0.70% of the second
$100 million of International Fund's average daily net assets, 0.65% of the
third $100 million of International Fund's average daily net assets, and 0.60%
of International Fund's average daily net assets in excess of $300 million.
The Sub-Adviser, a privately held company, was founded in 1986 by David F.
Marvin and Stanley Palmer. The stock of the Sub-Adviser is owned by Mr.
Marvin, Mr. Palmer and 23 other holders. The Sub-Adviser is engaged in the
management of global, non-United States and emerging markets equity
portfolios for institutional accounts. Although the Sub-Adviser has not
previously acted as adviser or sub-adviser for a registered investment
company, at September 30, 1994, the Sub-Adviser managed a total of $2.8
billion in investments for 47 institutional investors.
PORTFOLIO MANAGERS
JAMES DOAK is the portfolio manager for Stock Fund. Jim joined the Adviser in
1982 after serving for two years as vice president of INA Capital Advisors and
ten years as Vice President of Loomis-Sayles & Co. He has managed assets for
individual and institutional clients, specializing in equity investments, and
has served as the analyst and portfolio manager for Stock Fund since its
inception in December 1987. Jim received his bachelor's degree from Brown
University and his master's degree in business administration from the Wharton
School of Business. He is a Chartered Financial Analyst.
JAMES S. ROVNER is the portfolio manager for Equity Index Fund and Balanced
Fund. Jim joined the Adviser in 1986 and is a member of its Equity Group. This
group of analysts together selects equity issues to be included in certain FAIF
equity and balanced funds. Jim has managed assets for institutional and
individual clients for over 15 years, specializing in equity and balanced
investment strategies. He has served as portfolio manager and analyst for Equity
Index Fund and Balanced Fund since their inceptions in December 1992. Jim
received his bachelor's degree and his master's degree in business
administration from the University of Wisconsin. He is a Chartered Financial
Analyst.
JOHN G. ADAMS is portfolio co-manager for Limited Volatility Stock Fund and Vice
President/Director of Research for the Colorado Trust Investment Group. John
joined the Adviser in 1981, after serving for two years as a securities analyst
for Piper Jaffray Incorporated and for seven years as securities analyst and
portfolio manager for Northwestern National Bank's Trust Investment division.
John received his bachelor's degree from the University of Minnesota. He is a
Chartered Financial Analyst.
MICHAEL W. KELLOGG is portfolio co-manager for Limited Volatility Stock Fund. He
is also Senior Managing Director of the Adviser and Executive Vice President of
the Trust Investment Group in Colorado. Michael joined the Adviser in 1986 after
serving as a partner in an Omaha investment advisory firm and a portfolio
manager for Norwest Capital Management. He received his bachelor's degree from
Hastings College.
CORI B. JOHNSON is the portfolio manager for Asset Allocation Fund. Cori has
been managing assets using quantitative analysis techniques since 1992. She
joined the Adviser in 1991 as a securities analyst. Cori received her bachelor's
degree from Concordia College and her master's degree in business administration
from the University of Minnesota. She is a Chartered Financial Analyst.
GERALD C. BREN is portfolio co-manager for Equity Income Fund, Diversified
Growth Fund and Technology Fund and is the portfolio manager for Emerging Growth
Fund. Gerald joined the Adviser in 1972 as an investment analyst and has been
the Adviser's Manager of Equity Investments since 1986. Gerald received his
master's degree in business administration from the University of Chicago in
1972 and his Chartered Financial Analyst certification in 1977. He is a
Chartered Financial Analyst.
ALBIN S. DUBIAK is portfolio co-manager for Equity Income Fund, Diversified
Growth Fund and Emerging Growth Fund. Al began his investment career as a
security trader with The First National Bank of Chicago in 1963 before joining
the Adviser as an investment analyst in 1969. Since 1988, he has been the
Director of Investment Research and Fund Management. Al received his bachelor's
degree from Indiana University in 1962 and his master's degree in business
administration from the University of Arizona in 1969.
RICHARD J. RINKOFF is the portfolio manager for Regional Equity Fund. Rick
joined the Adviser in 1977 after serving as an investment officer for two years
for Pittsburgh National Bank. Since then, he has managed assets for individuals
and institutional clients of the Adviser, specializing in managing investments
in regional equities. He has served as portfolio manager for the regional fund
management style since 1981. Rick received his bachelor's degree in mathematics
and his master's degree in business from Carnegie-Mellon University. He is a
Chartered Financial Analyst.
LAWRENCE C. SMITH is the portfolio manager for Special Equity Fund. Larry joined
the Adviser in 1973 after serving as a securities analyst for three years at
Paine Webber and one year at Royal Globe Insurance. He has over 25 years in the
investment business and has managed portfolios in this style for over 10 years.
Larry received his bachelor's degree from Bowdoin College and his master's
degree in business administration from Columbia Business School.
ROLAND P. WHITCOMB is portfolio co-manager for Technology Fund. Roland joined
the Adviser in 1986 after serving as an account executive with Smith Barney &
Co. since 1979. He received his bachelor's degree from the University of Chicago
and is a Chartered Financial Analyst.
RICHARD W. JENSEN of the Adviser supervises and monitors the performance of the
Sub-Adviser with respect to International Fund. He is Senior Managing Director
and a portfolio manager with the Adviser, having joined it in 1967. Prior to
that time he was employed by Merrill Lynch, Pierce, Fenner & Smith and Irving
Trust Company. He received his bachelor's degree from the University of
Minnesota and is a Chartered Financial Analyst.
A committee comprised of the following five individuals shares the management of
International Fund on behalf of the Sub-Adviser:
DAVID F. MARVIN is Chairman of the Sub-Adviser and founded the firm together
with Mr. Palmer in 1986. Before founding the Sub-Adviser, Mr. Marvin was Vice
President in charge of DuPont Corporation's $10 billion internally-managed
pension fund. Prior to that Mr. Marvin was Associate Portfolio Manager, and then
Head Portfolio Manager, for Investors Diversified Services' IDS Stock Fund. Mr.
Marvin started in the investment business in 1965 as a securities analyst for
Chicago Title & Trust. He received his bachelor's degree from the University of
Illinois and his master's degree in business administration from Northwestern
University. He is a Chartered Financial Analyst and a member of the Financial
Analysts Federation.
STANLEY PALMER is President of the Sub-Adviser and co-founder of the firm. Mr.
Palmer was Equity Portfolio Manager for DuPont Corporation from 1978 through
1986, an analyst and portfolio manager at Investors Diversified Services from
1971 through 1978, and an analyst at Harris Trust & Savings Bank from 1964
through 1971. He received his bachelor's degree from Gustavus Adolphus College
and his master's degree in business administration from the University of Iowa.
He is a Chartered Financial Analyst and a member of the Financial Analysts
Federation.
TERRY B. MASON is a Vice President and Portfolio Manager of the Sub-Adviser.
Before joining the Sub-Adviser, Mr. Mason was employed for 14 years by DuPont
Corporation, the last five as international equity analyst and international
trader. He received his bachelor's degree from Glassboro State College and his
master's degree in business administration from Widener University.
JAY F. MIDDLETON is a portfolio manager for the Sub-Adviser and joined the firm
in 1989. He received his bachelor's degree from Wesleyan University.
TODD D. MARVIN is a portfolio manager for the Sub-Adviser and joined the firm in
1991. Before joining the Sub-Adviser, Mr. Marvin was employed by Oppenheimer &
Company as an analyst in investment banking. Mr. Marvin received his bachelor's
degree from Wesleyan University.
CUSTODIAN
The custodian of the Funds' assets is First Trust National Association (the
"Custodian"), First Trust Center, 180 East Fifth Street, St. Paul, Minnesota
55101. The Custodian is a subsidiary of First Bank System, Inc., which also
controls the Adviser.
As compensation for its services to Stock Fund, Equity Index Fund, Balanced
Fund, Asset Allocation Fund, Regional Equity Fund, and Special Equity Fund, the
Custodian is paid the following fees: (i) an annual administration fee of $750
per Fund; (ii) an issue held fee, computed as of the end of each month, at the
annual rate of $30 per securities issue held by each Fund; (iii) transaction
fees, consisting of (a) a securities buy/sell/maturity fee of $15 per each such
transaction, and (b) a payment received fee of $12 for each principal pay down
payment received on collateralized mortgage pass-through instruments; (iv) a
wire transfer fee of $10 per transaction; (v) a cash management fee, for
"sweeping" cash into overnight investments, at an annual rate of 0.25% of the
amounts so invested; and (vi) a remittance fee, for payment of each Fund's
expenses, of $3.50 per each check drawn for such remittances. The Custodian is
paid monthly fees equal to 0.03% of the average daily net assets of Limited
Volatility Stock Fund, Equity Income Fund, Diversified Growth Fund, Emerging
Growth Fund, and Technology Fund and 0.25% of the average daily net assets of
International Fund. Sub-custodian fees with respect to International Fund are
paid by the Custodian out of this amount. In addition, the Custodian is
reimbursed for its out-of-pocket expenses incurred while providing its services
to the Funds.
Rules adopted under the 1940 Act permit International Fund to maintain its
securities and cash in the custody of certain eligible foreign banks and
depositories. International Fund's portfolio of non-United States securities are
held by sub-custodians which are approved by the directors of FAIF in accordance
with these rules. This determination is made pursuant to these rules following a
consideration of a number of factors including, but not limited to, the
reliability and financial stability of the institution; the ability of the
institution to perform custodian services for International Fund; the reputation
of the institution in its national market; the political and economic stability
of the country in which the institution is located; and the risks of potential
nationalization or expropriation of International Fund's assets.
ADMINISTRATOR
The administrator for the Funds is SEI Financial Management Corporation (the
"Administrator"), 680 East Swedesford Road, Wayne, Pennsylvania 19087. The
Administrator, a wholly-owned subsidiary of SEI Corporation, provides the Funds
with certain administrative services necessary to operate the Funds. These
services include shareholder servicing and certain accounting and other
services. The Administrator provides these services for a fee calculated at an
annual rate of 0.12% of each Fund's average daily net assets, subject to a
minimum administrative fee during each fiscal year of $50,000 per Fund;
provided, that to the extent that the aggregate net assets of all First American
funds exceed $8 billion, the percentage stated above is reduced to 0.105%. From
time to time, the Administrator may voluntarily waive its fees or reimburse
expenses with respect to any of the Funds. Any such waivers or reimbursements
may be made at the Administrator's discretion and may be terminated at any time.
TRANSFER AGENT
Supervised Service Company (the "Transfer Agent") serves as the transfer agent
and dividend disbursing agent for the Funds. The address of the Transfer Agent
is 811 Main Street, Kansas City, Missouri 64105. The Transfer Agent is not
affiliated with the Distributor, the Administrator or the Adviser.
DISTRIBUTOR
SEI Financial Services Company is the principal distributor for shares of the
Funds and of the other FAIF Funds. The Distributor is a Pennsylvania corporation
and is the principal distributor for a number of investment companies. The
Distributor is a wholly-owned subsidiary of SEI Corporation and is located at
680 East Swedesford Road, Wayne, Pennsylvania 19087. The Distributor is not
affiliated with the Adviser, First Bank System, Inc., the Custodian or their
respective affiliates.
The Distributor, the Administrator and the Adviser may in their discretion
use their own assets to pay for certain costs of distributing Fund shares.
They also may discontinue any payment of such costs at any time.
PURCHASES AND REDEMPTIONS OF SHARES
SHARE PURCHASES AND REDEMPTIONS
Shares of the Funds are sold and redeemed on days on which the New York Stock
Exchange is open for business ("Business Days").
Payment for shares can be made only by wire transfer. Wire transfers of federal
funds for share purchases should be sent to First Bank National Association,
Minneapolis, Minnesota, ABA Number 091000022; For Credit to: Supervised Service
Company: Account Number 6023458026; For Further Credit To: (Investor Name and
Fund Name). Shares cannot be purchased by Federal Reserve wire on days on which
the New York Stock Exchange is closed and on Federal holidays upon which wire
transfers are restricted. Purchase orders will be effective and eligible to
receive dividends declared the same day if the Transfer Agent receives an order
before 3:00 p.m. Central time and the Custodian receives Federal funds before
the close of business that day. Otherwise, the purchase order will be effective
the next Business Day. The net asset value per share is calculated as of 3:00
p.m. Central time each Business Day. The Funds reserve the right to reject a
purchase order.
The Funds are required to redeem for cash all full and fractional shares of the
Funds. Redemption orders may be made any time before 3:00 p.m. Central time in
order to receive that day's redemption price. For redemption orders received
before 3:00 p.m. Central time, payment will ordinarily be made the same day by
transfer of Federal funds, but payment may be made up to 7 days later.
WHAT SHARES COST
Class C Shares of the Funds are sold and redeemed at net asset value. The net
asset value per share is determined as of the earlier of the close of the New
York Stock Exchange or 3:00 p.m. Central time on each day the New York Stock
Exchange is open for business, provided that net asset value need not be
determined on days when no Fund shares are tendered for redemption and no order
for that Fund's shares is received and on days on which changes in the value of
portfolio securities will not materially affect the current net asset value of
the Fund's shares. The price per share for purchases or redemptions is such
value next computed after the Transfer Agent receives the purchase order or
redemption request. In the case of redemptions and repurchases of shares owned
by corporations, trusts or estates, the Transfer Agent may require additional
documents to evidence appropriate authority in order to effect the redemption,
and the applicable price will be that next determined following the receipt of
the required documentation.
DETERMINING NET ASSET VALUE. The net asset value per share for each of the Funds
is determined by dividing the value of the securities owned by the Fund plus any
cash and other assets (including interest accrued and dividends declared but not
collected), less all liabilities, by the number of Fund shares outstanding. For
the purpose of determining the aggregate net assets of the Funds, cash and
receivables will be valued at their face amounts. Interest will be recorded as
accrued and dividends will be recorded on the ex-dividend date. Securities
traded on a national securities exchange or on the NASDAQ National Market System
are valued at the last reported sale price that day. Securities traded on a
national securities exchange or on the NASDAQ National Market System for which
there were no sales on that day, and securities traded on other over-the-counter
markets for which market quotations are readily available, are valued at the
mean between the bid and asked prices.
Portfolio securities underlying actively traded options are valued at their
market price as determined above. The current market value of any exchange
traded option held or written by a Fund is its last sales price on the exchange
prior to the time when assets are valued, unless the bid price is higher or the
asked price is lower, in which event the bid or asked price is used. In the
absence of any sales that day, options will be valued at the mean between the
current closing bid and asked prices.
Short-term securities with maturities of less than 60 days when acquired, or
which subsequently are within 60 days of maturity, are valued at amortized cost.
Securities and other assets for which market prices are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors. Subject to the use of reliable market quotations for
actively traded securities, fixed income securities may be valued on the basis
of prices provided by a pricing service when such prices are believed to reflect
the fair market value of the securities. Pricing services generally take into
account institutional size trading in similar groups of securities. The pricing
service and valuation procedures are reviewed and subject to approval by the
Board of Directors.
Although the methodology and procedures for determining net asset value are
identical for all classes of shares, the net asset value per share of different
classes of shares of the same Fund may differ because of the distribution
expenses charged to Class A and Class B Shares.
FOREIGN SECURITIES. Any assets or liabilities of the Funds initially expressed
in terms of foreign currencies are translated into United States dollars using
current exchange rates. Trading in securities on foreign markets may be
completed before the close of business on each business day of the Funds. Thus,
the calculation of the Funds' net asset value may not take place
contemporaneously with the determination of the prices of foreign securities
held in the Funds' portfolios. If events materially affecting the value of
foreign securities occur between the time when their price is determined and the
time when the Funds' net asset value is calculated, such securities will be
valued at fair value as determined in good faith by or under the direction of
the Board of Directors. In addition, trading in securities on foreign markets
may not take place on all days on which the New York Stock Exchange is open for
business or may take place on days on which the Exchange is not open for
business. Therefore, the net asset value of a Fund which holds foreign
securities might be significantly affected on days when an investor has no
access to the Fund.
EXCHANGING SECURITIES FOR FUND SHARES
A Fund may accept securities in exchange for Fund shares. A Fund will allow such
exchanges only upon the prior approval by the Fund and a determination by the
Fund and the Adviser that the securities to be exchanged are acceptable.
Securities accepted by a Fund will be valued in the same manner that a Fund
values its assets. The basis of the exchange will depend upon the net asset
value of Fund shares on the day the securities are valued.
CERTIFICATES AND CONFIRMATIONS
The Transfer Agent maintains a share account for each shareholder. Share
certificates will not be issued by the Funds.
Confirmations of each purchase and redemption are sent to each shareholder.
In addition, monthly confirmations are sent to report all transactions and
dividends paid during that month for the Funds.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid monthly with respect to Stock Fund, Equity Index
Fund, Balanced Fund, Limited Volatility Stock Fund, Asset Allocation Fund,
Equity Income Fund, Diversified Growth Fund, and Special Equity Fund, to all
shareholders of record on the record date. Dividends are declared paid quarterly
with respect to Emerging Growth Fund, Regional Equity Fund and Technology Fund,
and annually with respect to International Fund. Distributions of any net
realized long-term capital gains will be made at least once every 12 months.
Dividends and distributions are automatically reinvested in additional shares of
the Fund paying the dividend on payment dates at the ex-dividend date net asset
value without a sales charge, unless shareholders request cash payments on the
new account form or by writing to the Fund.
All shareholders on the record date are entitled to the dividend. If shares are
purchased before a record date for a dividend or a distribution of capital
gains, a shareholder will pay the full price for the shares and will receive
some portion of the purchase price back as a taxable dividend or distribution
(to the extent, if any, that the dividend or distribution is otherwise taxable
to holders of Fund shares). If shares are redeemed or exchanged before the
record date for a dividend or distribution or are purchased after the record
date, those shares are not entitled to the dividend or distribution.
The amount of dividends payable on Class C Shares generally will be more than
the dividends payable on Class A or Class B Shares because of the distribution
expenses charged to Class A and Class B Shares.
EXCHANGE PRIVILEGE
Shareholders may exchange Class C Shares of a Fund for currently available Class
C Shares of the other FAIF Funds or of other funds in the First American family
at net asset value. Exchanges of shares among the FAIF Funds must meet any
applicable minimum investment of the fund for which shares are being exchanged.
The ability to exchange shares of the Funds does not constitute an offering or
recommendation of shares of one fund by another fund. This privilege is
available to shareholders resident in any state in which the fund shares being
acquired may be sold. An investor who is considering acquiring shares in another
First American fund pursuant to the exchange privilege should obtain and
carefully read a prospectus of the fund to be acquired. Exchanges may be
accomplished by a written request, or by telephone if a preauthorized exchange
authorization is on file with the Transfer Agent, shareholder servicing agent,
or financial institution. Neither the Transfer Agent nor any Fund will be
responsible for the authenticity of exchange instructions received by telephone
if it reasonably believes those instructions to be genuine. The Funds and the
Transfer Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and they may be liable for losses resulting from
unauthorized or fraudulent telephone instructions if they do not employ these
procedures. These procedures may include taping of telephone conversations.
Shares of a class in which an investor is no longer eligible to participate may
be exchanged for shares of a class in which that investor is eligible to
participate. An example of this kind of exchange would be a situation in which
Class C Shares of a Fund held by a financial institution in a trust or agency
capacity for one or more individual beneficiaries are exchanged for Class A
Shares of that Fund and distributed to the individual beneficiaries.
FEDERAL INCOME TAXES
Each Fund intends to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), during its
current taxable year in order to be relieved of payment of federal income taxes
on amounts of taxable income it distributes to shareholders.
Dividends paid from each Fund's net investment income and net short-term capital
gains will be taxable to shareholders as ordinary income, whether or not the
shareholder elects to have such dividends automatically reinvested in additional
shares. Dividends paid by the Funds attributable to investments in the
securities of foreign issuers will not be eligible for the 70% deduction for
dividends received by corporations. Dividends paid from the net capital gains of
each Fund and designated as capital gain dividends will be taxable to
shareholders as long-term capital gains, regardless of the length of time for
which they have held their shares in the Fund.
Gain or loss realized upon the sale of shares in the Fund will be treated as
capital gain or loss, provided that the shares represented a capital asset in
the hands of the shareholder. Such gain or loss will be long-term gain or loss
if the shares were held for more than one year.
International Fund may be required to pay withholding and other taxes imposed by
foreign countries, generally at rates from 10% to 40%, which would reduce the
Fund's investment income. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. If at the end of International
Fund's taxable year more than 50% of its total assets consist of securities of
foreign corporations, it will be eligible to file an election with the Internal
Revenue Service pursuant to which shareholders of the Fund will be required to
include their respective pro rata portions of such foreign taxes in gross
income, treat such amounts as foreign taxes paid by them, and deduct such
amounts in computing their taxable income or, alternatively, use them as foreign
tax credits against their federal income taxes. If such an election is filed for
a year, International Fund shareholders will be notified of the amounts which
they may deduct as foreign taxes paid or use as foreign tax credits.
Alternatively, if the amount of foreign taxes paid by International Fund is not
large enough to warrant its making the election described above, the Fund
may claim the amount of foreign taxes paid as a deduction against its own gross
income. In that case, shareholders would not be required to include any amount
of foreign taxes paid by the Fund in their income and would not be permitted
either to deduct any portion of foreign taxes from their own income or to claim
any amount of foreign tax credit for taxes paid by the Fund.
This is a general summary of the federal tax laws applicable to the Funds and
their shareholders as of the date of this Prospectus. See the Statement of
Additional Information for further details. Before investing in the Funds, an
investor should consult his or her tax adviser about the consequences of state
and local tax laws.
FUND SHARES
Each share of a Fund is fully paid, nonassessable, and transferable. Shares may
be issued as either full or fractional shares. Fractional shares have pro rata
the same rights and privileges as full shares. Shares of the Funds have no
preemptive or conversion rights.
Each share of a Fund has one vote. On some issues, such as the election of
directors, all shares of all FAIF Funds vote together as one series. The shares
do not have cumulative voting rights. Consequently, the holders of more than 50%
of the shares voting for the election of directors are able to elect all of the
directors if they choose to do so. On issues affecting only a particular Fund or
Class, the shares of that Fund or Class will vote as a separate series. Examples
of such issues would be proposals to alter a fundamental investment restriction
pertaining to a Fund or to approve, disapprove or alter a distribution plan
pertaining to a Class.
Under the laws of the State of Maryland and FAIF's Articles of Incorporation,
FAIF is not required to hold shareholder meetings unless they (i) are required
by the 1940 Act, or (ii) are requested in writing by the holders of 25% or more
of the outstanding shares of FAIF.
CALCULATION OF PERFORMANCE DATA
From time to time, any of the Funds may advertise information regarding its
performance. Each Fund may publish its "yield," its "cumulative total return,"
its "average annual total return" and its "distribution rate." Distribution
rates may only be used in connection with sales literature and shareholder
communications preceded or accompanied by a Prospectus. Each of these
performance figures is based upon historical results and is not intended to
indicate future performance, and, except for "distribution rate," is
standardized in accordance with Securities and Exchange Commission ("SEC")
regulations.
"Yield" for the Funds is computed by dividing the net investment income per
share (as defined in applicable SEC regulations) earned during a 30-day period
(which period will be stated in the advertisement) by the maximum offering price
per share on the last day of the period. Yield is an annualized figure, in that
it assumes that the same level of net investment income is generated over a one
year period. The yield formula annualizes net investment income by providing for
semi-annual compounding.
"Total return" is based on the overall dollar or percentage change in value of a
hypothetical investment in a Fund assuming reinvestment of dividend
distributions and deduction of all charges and expenses, including, as
applicable, the maximum sales charge imposed on Class A Shares or the contingent
deferred sales charge imposed on Class B Shares redeemed at the end of the
specified period covered by the total return figure. "Cumulative total return"
reflects a Fund's performance over a stated period of time. "Average annual
total return" reflects the hypothetical annually compounded rate that would have
produced the same cumulative total return if performance had been constant over
the entire period. Because average annual returns tend to smooth out variations
in a Fund's performance, they are not the same as actual year-by-year results.
As a supplement to total return computations, a Fund may also publish "total
investment return" computations which do not assume deduction of the maximum
sales charge imposed on Class A Shares or the contingent deferred sales charge
imposed on Class B Shares.
"Distribution rate" is determined by dividing the income dividends per share for
a stated period by the maximum offering price per share on the last day of the
period. All distribution rates published for the Funds are measures of the level
of income dividends distributed during a specified period. Thus, these rates
differ from yield (which measures income actually earned by a Fund) and total
return (which measures actual income, plus realized and unrealized gains or
losses of a Fund's investments). Consequently, distribution rates alone should
not be considered complete measures of performance.
The performance of the Class C Shares of a Fund will normally be higher than for
the Class A and Class B Shares because Class C Shares are not subject to the
sales charges and distribution expenses applicable to Class A and Class B
Shares.
In reports or other communications to shareholders and in advertising material,
the performance of each Fund may be compared to recognized unmanaged indices or
averages of the performance of similar securities. Also, the performance of each
Fund may be compared to that of other funds of similar size and objectives as
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
independent mutual fund rating services, and each Fund may include in such
reports, communications and advertising material evaluations published by
nationally recognized independent ranking services and publications. For further
information regarding the Funds' performance, see "Fund Performance" in the
Statement of Additional Information.
SPECIAL INVESTMENT METHODS
This section provides additional information concerning the securities in which
the Funds may invest and related topics. Further information concerning these
matters is contained in the Statement of Additional Information.
CASH ITEMS
The "cash items" in which the Funds may invest, as described under "Investment
Objectives and Policies," include short-term obligations such as rated
commercial paper and variable amount master demand notes; United States
dollar-denominated time and savings and time deposits (including certificates of
deposit); bankers acceptances; obligations of the United States Government or
its agencies or instrumentalities; repurchase agreements collateralized by
eligible investments of a Fund; securities of other mutual funds which invest
primarily in debt obligations with remaining maturities of 13 months or less
(which investments also are subject to the advisory fee); and other similar
high-quality short-term United States dollar-denominated obligations.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. A repurchase agreement
involves the purchase by a Fund of securities with the agreement that after a
stated period of time, the original seller will buy back the same securities
("collateral") at a predetermined price or yield. Repurchase agreements involve
certain risks not associated with direct investments in securities. If the
original seller defaults on its obligation to repurchase as a result of its
bankruptcy or otherwise, the purchasing Fund will seek to sell the collateral,
which could involve costs or delays. Although collateral (which may consist of
any fixed income security which is an eligible investment for the Fund entering
into the repurchase agreement) will at all times be maintained in an amount
equal to the repurchase price under the agreement (including accrued interest),
a Fund would suffer a loss if the proceeds from the sale of the collateral were
less than the agreed-upon repurchase price. The Adviser or, in the case of
International Fund, the Sub-Adviser will monitor the creditworthiness of the
firms with which the Funds enter into repurchase agreements.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
Each of the Funds (excluding Equity Index Fund) may purchase securities on a
when-issued or delayed-delivery basis. When such a transaction is negotiated,
the purchase price is fixed at the time the purchase commitment is entered, but
delivery of and payment for the securities take place at a later date. A Fund
will not accrue income with respect to securities purchased on a when-issued or
delayed-delivery basis prior to their stated delivery date. Pending delivery of
the securities, each Fund will maintain in a segregated account cash or liquid
high-grade securities in an amount sufficient to meet its purchase commitments.
The purchase of securities on a when-issued or delayed-delivery basis exposes a
Fund to risk because the securities may decrease in value prior to delivery. In
addition, a Fund's purchase of securities on a when-issued or delayed-delivery
basis while remaining substantially fully invested could increase the amount of
the Fund's total assets that are subject to market risk, resulting in increased
sensitivity of net asset value to changes in market prices. However, the Funds
will engage in when-issued and delayed-delivery transactions only for the
purpose of acquiring portfolio securities consistent with their investment
objectives, and not for the purpose of investment leverage. A seller's failure
to deliver securities to a Fund could prevent the Fund from realizing a price or
yield considered to be advantageous.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, each of the Funds (excluding Equity
Index Fund) may lend portfolio securities representing up to one-third of the
value of its total assets to broker-dealers, banks or other institutional
borrowers of securities. As with other extensions of credit, there may be risks
of delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, the Funds will
only enter into loan arrangements with broker-dealers, banks, or other
institutions which the Adviser or, in the case of International Fund, the
Sub-Adviser has determined are creditworthy under guidelines established by the
Board of Directors. In these loan arrangements, the Funds will receive
collateral in the form of cash, United States Government securities or other
high-grade debt obligations equal to at least 100% of the value of the
securities loaned. Collateral is marked to market daily. The Funds will pay a
portion of the income earned on the lending transaction to the placing broker
and may pay administrative and custodial fees in connection with these loans.
OPTIONS TRANSACTIONS
PURCHASES OF PUT AND CALL OPTIONS. The Funds may purchase put and call options
to the extent specified with respect to particular Funds under "Investment
Objectives and Policies." These transactions will be undertaken only for the
purpose of reducing risk to the Funds; that is, for "hedging" purposes.
Depending on the Fund, these transactions may include the purchase of put and
call options on equity securities, on stock indices, on interest rate indices,
or (only in the case of International Fund) on foreign currencies. Options on
futures contracts are discussed below under "Futures and Options on Futures."
A put option on a security gives the purchaser of the option the right (but not
the obligation) to sell, and the writer of the option the obligation to buy, the
underlying security at a stated price (the "exercise price") at any time before
the option expires. A call option on a security gives the purchaser the right
(but not the obligation) to buy, and the writer the obligation to sell, the
underlying security at the exercise price at any time before the option expires.
The purchase price for a put or call option is the "premium" paid by the
purchaser for the right to sell or buy.
Options on indices are similar to options on securities except that, rather than
the right to take or make delivery of a specific security at a stated price, an
option on an index gives the holder the right to receive, upon exercise of the
option, a defined amount of cash if the closing value of the index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option.
None of the Funds other than International Fund will invest more than 5% of the
value of its total assets in purchased options, provided that options which are
"in the money" at the time of purchase may be excluded from this 5% limitation.
A call option is "in the money" if the exercise price is lower than the current
market price of the underlying security or index, and a put option is "in the
money" if the exercise price is higher than the current market price. A Fund's
loss exposure in purchasing an option is limited to the sum of the premium paid
and the commission or other transaction expenses associated with acquiring the
option.
The use of purchased put and call options involves certain risks. These include
the risk of an imperfect correlation between market prices of securities held by
a Fund and the prices of options, and the risk of limited liquidity in the event
that a Fund seeks to close out an options position before expiration by entering
into an offsetting transaction.
WRITING OF COVERED CALL OPTIONS. The Funds may write (sell) covered call options
to the extent specified with respect to particular Funds under "Investment
Objectives and Policies." These transactions would be undertaken principally to
produce additional income. Depending on the Fund, these transactions may include
the writing of covered call options on equity securities or (only in the case of
International Fund) on foreign currencies which a Fund owns or has the right to
acquire or on interest rate indices.
When a Fund sells a covered call option, it is paid a premium by the purchaser.
If the market price of the security covered by the option does not increase
above the exercise price before the option expires, the option generally will
expire without being exercised, and the Fund will retain both the premium paid
for the option and the security. If the market price of the security covered by
the option does increase above the exercise price before the option expires,
however, the option is likely to be exercised by the purchaser. In that case the
Fund will be required to sell the security at the exercise price, and it will
not realize the benefit of increases in the market price of the security above
the exercise price of the option.
FUTURES AND OPTIONS ON FUTURES
Equity Index Fund, Balanced Fund, Asset Allocation Fund and International Fund
may engage in futures transactions and purchase options on futures to the extent
specified with under "Investment Objectives and Policies." Depending on the
Fund, these transactions may include the purchase of stock index futures and
options on stock index futures, and the purchase of interest rate futures and
options on interest rate futures. In addition, International Fund may enter into
contracts for the future delivery of securities or foreign currencies and
futures contracts based on a specific security, class of securities, or foreign
currency.
A futures contract on a security obligates one party to purchase, and the other
to sell, a specified security at a specified price on a date certain in the
future. A futures contract on an index obligates the seller to deliver, and
entitles the purchaser to receive, an amount of cash equal to a specific dollar
amount times the difference between the value of the index at the expiration
date of the contract and the index value specified in the contract. The
acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified exercise price,
to sell or to purchase the underlying futures contract at any time during the
option period.
A Fund may use futures contracts and options on futures in an effort to hedge
against market risks and, in the case of International Fund, as part of its
management of foreign currency transactions. In addition, Equity Index Fund may
use stock index futures and options on futures to maintain sufficient liquidity
to meet redemption requests, to increase the level of Fund assets devoted to
replicating the composition of the S&P 500, and to reduce transaction costs.
Aggregate initial margin deposits for futures contracts, and premiums paid for
related options, may not exceed 5% of a Fund's total assets, and the value of
securities that are the subject of such futures and options (both for receipt
and delivery) may not exceed 1/3 of the market value of a Fund's total assets.
Futures transactions will be limited to the extent necessary to maintain each
Fund's qualification as a regulated investment company under the Internal
Revenue Code of 1986, as amended.
Futures transactions involve brokerage costs and require a Fund to segregate
assets to cover contracts that would require it to purchase securities or
currencies. A Fund may lose the expected benefit of futures transactions if
interest rates, exchange rates or securities prices move in an unanticipated
manner. Such unanticipated changes may also result in poorer overall performance
than if the Fund had not entered into any futures transactions. In addition, the
value of a Fund's futures positions may not prove to be perfectly or even highly
correlated with the value of its portfolio securities or foreign currencies,
limiting the Fund's ability to hedge effectively against interest rate, exchange
rate and/or market risk and giving rise to additional risks. There is no
assurance of liquidity in the secondary market for purposes of closing out
futures positions.
FIXED INCOME SECURITIES
The fixed income securities in which Stock Fund, Limited Volatility Stock Fund,
Equity Income Fund, Diversified Growth Fund, Emerging Growth Fund, Regional
Equity Fund, Special Equity Fund, and Technology Fund may invest include
securities issued or guaranteed by the United States Government or its agencies
or instrumentalities, nonconvertible preferred stocks, nonconvertible corporate
debt securities, and short-term obligations of the kinds described above under
"-- Cash Items." Investments in nonconvertible preferred stocks and
nonconvertible corporate debt securities will be limited to securities which are
rated at the time of purchase not less than BBB by Standard & Poor's or Baa by
Moody's (or equivalent short-term ratings), or which have been assigned an
equivalent rating by another nationally recognized statistical rating
organization, or which are of comparable quality in the judgment of the Adviser.
Obligations rated BBB, Baa or their equivalent, although investment grade, have
speculative characteristics and carry a somewhat higher risk of default than
obligations rated in the higher investment grade categories.
Equity Income Fund also may invest a portion of its assets in less than
investment grade convertible debt obligations. For a description of such
obligations and the risks associated therewith, see "Investment Objectives and
Policies -- Equity Income Fund."
The fixed income securities specified above, as well as the fixed income
securities in which Balanced Fund and Asset Allocation Fund may invest as
described under "Investment Objectives and Policies," are subject to (i)
interest rate risk (the risk that increases in market interest rates will cause
declines in the value of debt securities held by a Fund); (ii) credit risk (the
risk that the issuers of debt securities held by a Fund default in making
required payments); and (iii) call or prepayment risk (the risk that a borrower
may exercise the right to prepay a debt obligation before its stated maturity,
requiring a Fund to reinvest the prepayment at a lower interest rate).
FOREIGN SECURITIES
GENERAL. Under normal market conditions International Fund invests at least 65%
of its total assets in equity securities which trade in markets other than the
United States. In addition, the other Funds (excluding Equity Index Fund, Asset
Allocation Fund, and Regional Equity Fund) may invest lesser proportions of
their assets in securities of foreign issuers which are either listed on a
United States securities exchange or represented by American Depositary
Receipts.
Investment in foreign securities is subject to special investment risks that
differ in some respects from those related to investments in securities of
United States domestic issuers. These risks include political, social or
economic instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of the imposition of exchange
controls, expropriation, limits on removal of currency or other assets,
nationalization of assets, foreign withholding and income taxation, and foreign
trading practices (including higher trading commissions, custodial charges and
delayed settlements). Foreign securities also may be subject to greater
fluctuations in price than securities issued by United States corporations. The
principal markets on which these securities trade may have less volume and
liquidity, and may be more volatile, than securities markets in the United
States.
In addition, there may be less publicly available information about a foreign
company than about a United States domiciled company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to United States domestic
companies. There is also generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the United States.
Confiscatory taxation or diplomatic developments could also affect investment in
those countries. In addition, foreign branches of United States banks, foreign
banks and foreign issuers may be subject to less stringent reserve requirements
and to different accounting, auditing, reporting, and recordkeeping standards
than those applicable to domestic branches of United States banks and United
States domestic issuers.
AMERICAN DEPOSITARY RECEIPTS AND EUROPEAN DEPOSITARY RECEIPTS. For many foreign
securities, United States dollar-denominated American Depositary Receipts, which
are traded in the United States on exchanges or over-the-counter, are issued by
domestic banks. American Depositary Receipts represent the right to receive
securities of foreign issuers deposited in a domestic bank or a correspondent
bank. American Depositary Receipts do not eliminate all the risk inherent in
investing in the securities of foreign issuers. However, by investing in
American Depositary Receipts rather than directly in foreign issuers' stock, a
Fund can avoid currency risks during the settlement period for either purchases
or sales. In general, there is a large, liquid market in the United States for
many American Depositary Receipts. The information available for American
Depositary Receipts is subject to the accounting, auditing and financial
reporting standards of the domestic market or exchange on which they are traded,
which standards are more uniform and more exacting than those to which many
foreign issuers may be subject. International Fund also may invest in European
Depositary Receipts, which are receipts evidencing an arrangement with a
European bank similar to that for American Depositary Receipts and which are
designed for use in the European securities markets. European Depositary
Receipts are not necessarily denominated in the currency of the underlying
security.
Certain American Depositary Receipts and European Depositary Receipts, typically
those denominated as unsponsored, require the holders thereof to bear most of
the costs of the facilities while issuers of sponsored facilities normally pay
more of the costs thereof. The depository of an unsponsored facility frequently
is under no obligation to distribute shareholder communications received from
the issuer of the deposited securities or to pass through the voting rights to
facility holders in respect to the deposited securities, whereas the depository
of a sponsored facility typically distributes shareholder communications and
passes through voting rights.
FOREIGN CURRENCY TRANSACTIONS
International Fund invests in securities which are purchased and sold in foreign
currencies. The value of its assets as measured in United States dollars
therefore may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. International Fund
also will incur costs in converting United States dollars to local currencies,
and vice versa.
International Fund will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date certain at a
specified price. These forward currency contracts are traded directly between
currency traders (usually large commercial banks) and their customers.
International Fund may enter into forward currency contracts in order to hedge
against adverse movements in exchange rates between currencies. It may engage in
"transaction hedging" to protect against a change in the foreign currency
exchange rate between the date the Fund contracts to purchase or sell a security
and the settlement date, or to "lock in" the United States dollar equivalent of
a dividend or interest payment made in a foreign currency. It also may engage in
"portfolio hedging" to protect against a decline in the value of its portfolio
securities as measured in United States dollars which could result from changes
in exchange rates between the United States dollar and the foreign currencies in
which the portfolio securities are purchased and sold. International Fund also
may hedge its foreign currency exchange rate risk by engaging in currency
financial futures and options transactions.
Although a foreign currency hedge may be effective in protecting the Fund from
losses resulting from unfavorable changes in exchanges rates between the United
States dollar and foreign currencies, it also would limit the gains which might
be realized by the Fund from favorable changes in exchange rates. The
Sub-Adviser's decision whether to enter into currency hedging transactions will
depend in part on its view regarding the direction and amount in which exchange
rates are likely to move. The forecasting of movements in exchange rates is
extremely difficult, so that it is highly uncertain whether a hedging strategy,
if undertaken, would be successful. To the extent that the Sub-Adviser's view
regarding future exchange rates proves to have been incorrect, International
Fund may realize losses on its foreign currency transactions.
International Fund does not intend to enter into forward currency contracts or
maintain a net exposure in such contracts where it would be obligated to deliver
an amount of foreign currency in excess of the value of its portfolio securities
or other assets denominated in that currency.
MORTGAGE-BACKED SECURITIES
With respect to the fixed income portion of its portfolio, Balanced Fund may
invest in mortgage-backed securities which are Agency Pass-Through Certificates
or collateralized mortgage obligations ("CMOs"), as described below.
Agency Pass-Through Certificates are mortgage pass-through certificates
representing undivided interests in pools of residential mortgage loans.
Distribution of principal and interest on the mortgage loans underlying an
Agency Pass-Through Certificate is an obligation of or guaranteed by Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC").
The obligation of GNMA with respect to such certificates is backed by the full
faith and credit of the United States, while the obligations of FNMA and FHLMC
with respect to such certificates rely solely on the assets and credit of those
entities. The mortgage loans underlying GNMA certificates are partially or fully
guaranteed by the Federal Housing Administration or the Veterans Administration,
while the mortgage loans underlying FNMA certificates and FHLMC certificates are
conventional mortgage loans which are, in some cases, insured by private
mortgage insurance companies. Agency Pass-Through Certificates may be issued in
a single class with respect to a given pool of mortgage loans or in multiple
classes.
CMOs are debt obligations typically issued by a private special-purpose entity
and collateralized by residential mortgage loans or Agency Pass-Through
Certificates. Balanced Fund will invest only in CMOs which are rated AAA by
Standard & Poor's or Aaa by Moody's or which have been assigned an equivalent
rating by another nationally recognized statistical rating organization, and
which are either (i) collateralized by Agency Pass-Through Certificates, (ii)
collateralized by a pool of residential mortgage loans in which each mortgage
loan is guaranteed as to payment of principal and interest by an agency or
instrumentality of the United States Government, or (iii) collateralized by a
pool of residential mortgage loans and payment on which is otherwise supported
by obligations of the United States Government or its agencies or
instrumentalities. Because CMOs are debt obligations of private entities,
payments on CMOs generally are not obligations of or guaranteed by any
governmental entity, and their ratings and creditworthiness typically depend on
the legal insulation of the issuer and transaction from the consequences of a
sponsoring entity's bankruptcy. CMOs generally are issued in multiple classes,
with holders of each class entitled to receive specified portions of the
principal payments and prepayments and/or of the interest payments on the
underlying mortgage loans. These entitlements can be specified in a wide variety
of ways, so that the payment characteristics of various classes may differ
greatly from one another. Examples of the more common classes are provided in
the Statement of Additional Information.
It generally is more difficult to predict the effect of changes in market
interest rates on the return on mortgaged-backed securities than to predict the
effect of such changes on the return of a conventional fixed-rate debt
instrument, and the magnitude of such effects may be greater in some cases. The
return on interest-only and principal-only mortgage-backed securities is
particularly sensitive to changes in interest rates and prepayment speeds. When
interest rates decline and prepayment speeds increase, the holder of an
interest-only mortgage-backed security may not even recover its initial
investment. Similarly, the return on an inverse floating rate CMO is likely to
decline more sharply in periods of increasing interest rates than that of a
fixed-rate security. For these reasons, interest-only, principal-only and
inverse floating rate mortgage-backed securities generally have greater risk
than more conventional classes of mortgage-backed securities. Balanced Fund will
not invest more than 10% of its total fixed income assets in interest-only,
principal-only or inverse floating rate mortgage backed securities.
ASSET-BACKED SECURITIES
With respect to the fixed income portion of its portfolio, Balanced Fund may
invest in asset-backed securities. Asset-backed securities generally constitute
interests in, or obligations secured by, a pool of receivables other than
mortgage loans, such as automobile loans and leases, credit card receivables,
home equity loans and trade receivables. Asset-backed securities generally are
issued by a private special-purpose entity. Their ratings and creditworthiness
typically depend on the legal insulation of the issuer and transaction from the
consequences of a sponsoring entity's bankruptcy, as well as on the credit
quality of the underlying receivables and the amount and credit quality of any
third-party credit enhancement supporting the underlying receivables or the
asset-backed securities. Asset-backed securities and their underlying
receivables generally are not issued or guaranteed by any governmental entity.
BANK INSTRUMENTS
The bank instruments in which Balanced Fund may invest include time and savings
deposits, deposit notes and bankers acceptances (including certificates of
deposit) in commercial or savings banks. They also include Eurodollar
Certificates of Deposit issued by foreign branches of United States or foreign
banks; Eurodollar Time Deposits, which are United States dollar-denominated
deposits in foreign branches of United States or foreign banks; and Yankee
Certificates of Deposit, which are United States dollar-denominated certificates
of deposit issued by United States branches of foreign banks and held in the
United States. For a description of certain risks of investing in foreign
issuers' securities, see "-- Foreign Securities" above. In each instance,
Balanced Fund may only invest in bank instruments issued by an institution which
has capital, surplus and undivided profits of more than $100 million or the
deposits of which are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund.
PORTFOLIO TRANSACTIONS
Portfolio transactions in the over-the-counter market will be effected with
market makers or issuers, unless better overall price and execution are
available through a brokerage transaction. It is anticipated that most portfolio
transactions involving debt securities will be executed on a principal basis.
Also, with respect to the placement of portfolio transactions with securities
firms, subject to the overall policy to seek to place portfolio transactions as
efficiently as possible and at the best price, research services and placement
of orders by securities firms for a Fund's shares may be taken into account as a
factor in placing portfolio transactions for the Fund.
PORTFOLIO TURNOVER
Although the Funds do not intend generally to trade for short-term profits, they
may dispose of a security without regard to the time it has been held when such
action appears advisable to the Adviser or, in the case of International Fund,
the Sub-Adviser. The portfolio turnover rate for a Fund may vary from year to
year and may be affected by cash requirements for redemptions of shares. High
portfolio turnover rates generally would result in higher transaction costs and
could result in additional tax consequences to a Fund's shareholders.
INVESTMENT RESTRICTIONS
The fundamental and nonfundamental investment restrictions of the Funds are set
forth in full in the Statement of Additional Information. The fundamental
restrictions include the following:
* None of the Funds will borrow money, except from banks for temporary or
emergency purposes. The amount of such borrowing may not exceed 10% of the
borrowing Fund's total assets, except for Asset Allocation Fund, which may
borrow in amounts not to exceed 33-1/3% of its total assets. None of the
Funds will borrow money for leverage purposes. For the purpose of this
investment restriction, the use of options and futures transactions and the
purchase of securities on a when-issued or delayed-delivery basis shall not
be deemed the borrowing of money.
* None of the Funds will mortgage, pledge or hypothecate its assets, except
in an amount not exceeding 15% of the value of its total assets to secure
temporary or emergency borrowing.
* None of the Funds will make short sales of securities.
* None of the Funds will purchase any securities on margin except to obtain
such short-term credits as may be necessary for the clearance of
transactions and except, in the case of Emerging Growth Fund, Technology
Fund, International Fund and Limited Volatility Stock Fund, as may be
necessary to make margin payments in connection with foreign currency
futures and other derivative transactions.
A fundamental policy or restriction, including those stated above, cannot be
changed without an affirmative vote of the holders of a "majority" of the
outstanding shares of the applicable Fund, as defined in the 1940 Act.
As a nonfundamental policy, none of the Funds will invest more than 15% of its
net assets in all forms of illiquid investments, as determined pursuant to
applicable Securities and Exchange Commission rules and interpretations. Section
4(2) commercial paper may be determined to be "liquid" under guidelines adopted
by the Board of Directors. Rule 144A securities may in the future be determined
to be "liquid" under guidelines adopted by the Board of Directors if the current
position of certain state securities regulators regarding such securities is
modified. Investing in Rule 144A securities could have the effect of increasing
the level of illiquidity in a Fund to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities.
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Investment Adviser
FIRST BANK NATIONAL ASSOCIATION
601 Second Avenue South
Minneapolis, Minnesota 55402
Custodian
FIRST TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
Distributor
SEI FINANCIAL SERVICES COMPANY
680 East Swedesford Road
Wayne, Pennsylvania 19087
Administrator
SEI FINANCIAL MANAGEMENT CORPORATION
680 East Swedesford Road
Wayne, Pennsylvania 19087
Transfer Agent
SUPERVISED SERVICE COMPANY
811 Main Street
Kansas City, Missouri 64105
Independent Auditors
KPMG PEAT MARWICK LLP
90 South Seventh Street
Minneapolis, Minnesota 55402
Counsel
DORSEY & WHITNEY P.L.L.P.
220 South Sixth Street
Minneapolis, Minnesota 55402
FIRST AMERICAN MUTUAL FUNDS
FIRST AMERICAN INVESTMENT FUNDS, INC.
ANNUAL REPORT
SEPTEMBER 30, 1994
[LOGO] FIRST AMERICAN FUNDS
The power of disciplined investing
TABLE OF CONTENTS
MESSAGE FROM YOUR CHAIRMAN 1
ECONOMIC AND INVESTMENT REVIEW 2
PORTFOLIO PERFORMANCE DISCUSSION 4
STATEMENTS OF NET ASSETS/
SCHEDULES OF INVESTMENTS 15
STATEMENTS OF ASSETS AND LIABILITIES 66
STATEMENTS OF OPERATIONS 68
STATEMENTS OF CHANGES IN NET ASSETS 72
FINANCIAL HIGHLIGHTS 76
NOTES TO FINANCIAL STATEMENTS 79
INDEPENDENT AUDITORS' REPORT 84
NOTICE TO SHAREHOLDERS 85
MESSAGE FROM YOUR CHAIRMAN
September 30, 1994
Dear Shareholder:
The First American Family of Mutual Funds experienced a banner year. There
was steady growth within the Fund family, due to an ever expanding group of
funds, as well as growth within the portfolios. Assets under management
totaled over $1.2 Billion as of September 30, 1994.
The expansion in the Fund family included the following new portfolios:
Minnesota Insured Intermediate Tax Free Fund, Colorado Intermediate Tax Free
Fund, International Fund, Emerging Growth Fund, and Technology Fund. We also
welcomed the First American Mutual Funds to the Fund family with the addition
of the Managed Income Fund, Limited Term Tax Free Income Fund, Diversified
Growth Fund, and Equity Income Fund.
In addition to the expansion of Fund options, we also expanded the options
for purchasing First American Funds with the introduction of "B" shares. This
new "Class B" is now available on 13 portfolios, and allows investors to
purchase First American Funds without a sales charge at the time of purchase.
While the growth of the Fund family was extensive, it has not altered the
direction and focus of our Fund Managers. Their consistent approach to
investing has led to many of our portfolios receiving national recognition in
such publications as the Wall Street Journal, Business Week, USA Today, and
American Banker.
As we look forward to a new year, we will continue our commitment to high
quality, and a consistent approach to investing.
Sincerely,
/s/ Joseph D. Strauss
Joseph D. Strauss
Chairman
ECONOMIC AND INVESTMENT REVIEW
September 30, 1994
Although we believe the domestic economy is in the process of slowing to a
moderate, sustainable pace, the pulse of economic growth has varied widely
over the past year. Last fall the economy surged from a burst of pent-up
demand and then slowed in the summer months. It appears to have again
increased its rate of growth this fall; strong payroll employment has offset
the restraining impact of higher interest rates. As might well be imagined,
investor perceptions of the shifting economic environment have ranged from
fear of an inflation generating boom, to stagflation, to even possible
recession. Historians warn us that the economic expansion is 42 months old
and we should look for its end shortly. We, however, remember the slow,
halting progress of the first two years of the expansion and wonder if the
historical economic clock needs to be set back a bit. Continuing strength in
capital investment and an anticipated improvement in the balance of trade,
helped by the recovery of the European and Japanese economies, complete the
picture of moderate economic growth that we forecast for the new year.
Closely linked to the momentum of economic growth, the rate of inflation will
control the expansion's life span through its influence on monetary policy,
long interest rates, and the value of the dollar. Inflation at the consumer
level has been moderate with an increase in consumer prices of 3.0% over the
past 12 months. Intense retail price competition and value conscious
consumers have kept the increase in retail prices moderate thus far. Price
increases for raw materials have been less well behaved as the quotes for
commodities such as copper and paper have soared to new highs for this cycle.
Fortunately, growing productivity and small increases in employee
compensation have helped to offset manufacturers' rising raw materials
prices. Profitability for the manufacturing sector has been excellent and
good earnings have been broad based, favorably surprising investors in recent
quarters.
In the closing months of 1993, strong domestic economic activity and higher
interest rates contributed to strength of the dollar in international
currency markets. As the new year began, a very different and highly negative
array of factors impacted the dollar: flows of investment capital into dollar
denominated assets slowed precipitously; doubts emerged about the
Administration's use of the dollar in foreign trade policy; and the
credibility of the Federal Reserve's disinflationary monetary policy was
questioned. Although conferring some advantage in international trade, the
resulting weakness in the dollar has troubling inflationary implications as
import prices rise. Fortunately, we believe the height of negative pressure
on the dollar has been reached and the dollar will stabilize in the months
ahead. A year ago, the current quote of 97 yen to the dollar would have been
surprising, so too the sharp increase in interest rates which has occurred
this year.
Last October's 5.78% yield on the long treasury marked the low interest rate
for the current cycle. Since then, interest rates have risen and bond prices
have fallen sharply -- far more sharply than might have been expected, given
the moderate trend of economic growth and well contained rate of inflation.
No doubt the unwinding of speculative fixed income portfolios accelerated the
escalation of interest rates; however, the surge was still surprising to the
vast majority of investors. Moving preemptively to diffuse inflationary
pressures, the Federal Reserve began a series of steps that have raised short
term interest rates, as measured by the federal funds rate, from 3.00% to
4.75% since February. To support the dollar and moderate the upward pressure
on long interest rates, the Fed has aggressively pursued a credible
disinflationary monetary policy. The current level of economic activity
virtually mandates an additional increase in short term interest rates in the
immediate future. Although interest rates will continue to reflect the upward
cyclical pressure of the economic expansion, long treasury bonds, yielding
8.00%, appear to reflect excessive pessimism with regard to the future course
of the economy and inflation. As a result, the average maturity of the First
American bond portfolios has been lengthened in anticipation of a moderate
decline in yields that should extend through the remainder of this year and
possibly into early 1995. The impact of rising interest rates was not
confined to the bond market.
From the start of the Funds' fiscal year the stock market rose steadily,
posting its high in early February, virtually coincident with the initial
increase in short interest rates by the Federal reserve. Rising interest
rates and deceleration of demand for domestic equities stocks have restrained
the stock market, but surprisingly good corporate earnings reports have been
a continuing source of strength. For the fiscal year, the S&P 500 produced a
3.7% total return, a modest figure in comparison to gains of previous years.
Until interest rates stabilize or decline, the broad market for domestic
stocks would appear to have limited appreciation potential. Fortunately,
there are sectors, industries, and companies which do possess considerable
investment opportunity. The market is highly selective and has effectively
placed a premium on the sound fundamental investment research developed by
First Asset Management. Currently, we find opportunity in the stocks of
industrial cyclical companies, serving the capital goods and technology
sectors. The stocks of companies undergoing major changes in product strategy
or in cost structure also present good investment alternatives.
The First American family of funds has experienced significant growth both in
assets and in the variety of investment alternatives that are available. Our
shareholders can choose from value, growth, or international equity funds and
a broad spectrum of money market and fixed income funds. Despite this
diversity of funds, there is a common thread in all portfolios. Each
portfolio consistently employs a well defined discipline in its management.
It has been a privilege to serve our shareholders over the past year. We at
First Asset Management appreciate your continued confidence.
Sincerely,
/s/ John M. Murphy, Jr.
JOHN M. MURPHY, JR.
Senior Managing Director
First Asset Management
Chairman, First Trust
PORTFOLIO PERFORMANCE DISCUSSION
September 30, 1994
LIMITED TERM INCOME FUND*
The Fund's total return for the year ended September 30, 1994 was 2.2% (Class
A w/o load) compared with a return of 2.5% on the Merrill Lynch 1 year
Treasury Bill Index. Longer term portfolio returns and market indices were
generally negative for this period.
Interest rates have risen sharply all along the yield curve since mid-October
of 1993, and have had an adverse effect on all bond portfolios. Indeed,
shorter term rates have risen even faster than longer term rates in the past
year, in part reflecting the increase in the Federal Fund's rate of 1.75% since
early 1994.
The Fund's relatively short maturity helped dampen the effects of rising
interest rates as it is designed to do, but could not offset them completely.
The Fund's mortgage holdings, which had relatively poor performance in 1993
because of the rapid acceleration in collateral prepayments, have performed
much better in 1994.
VALUE OF A $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Limited Term Income Fund (without load) $10,000 $10,344 $10,573
First American Limited Term Income Fund (with load) $ 9,550 $ 9,879 $10,097
First American Limited Term Income Fund -- Class C $10,000 $10,344 $10,573
Merrill Lynch 1-Year Treasury Index $10,000 $10,293 $10,552
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load 2.21% 3.24%
Class A with load 0.12% 1.17%
Class C 2.21% 3.24%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Limited Term Income Fund
Institutional Class since inception, which is not synthetic, is 1.9%.
INTERMEDIATE TERM INCOME FUND**
The Fund had a total return of -1.1% (Class A w/o load) compared with -1.7%
for the Lehman Intermediate Government/ Corporate Bond Index in the year
ended September 30, 1994.
After an important cyclical low in mid-October of 1993, interest rates have
risen sharply and bond prices have fallen further than at any time since
1987. For example, yields on 10 year Treasury notes rose nearly 250 basis
points in the 12 months ended in September.
The Fund had a shorter maturity than the intermediate market index during the
sharp rise in rates. In addition, the portfolio was structured to at least
partly offset the consequences of a flattening yield curve. These strategies
helped to dampen the adverse effects of the rise in yields on portfolio
returns. Finally, the mortgage portion of the portfolio has performed much
better in 1994, than 1993 when interest rates were still falling and mortgage
collateral prepayments were accelerating rapidly.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Intermediate Term Income Fund (without load) $10,000 $10,673 $10,561
First American Intermediate Term Income Fund (with load) $ 9,625 $10,273 $10,165
First American Intermediate Term Income Fund -- Class C $10,000 $10,673 $10,561
Lehman Intermediate Term Government/Corporate Index $10,000 $10,860 $10,680
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load -1.05% 3.35%
Class A with load -4.77% 2.11%
Class C -1.05% 3.35%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Intermediate Term Income Fund
Institutional Class since inception, which is not synthetic, is -2.3%.
FIXED INCOME FUND*
The very sharp rise in interest rates since mid-October of 1993 has been the
largest increase in interest rates since 1987, and the low coupons and low
imbedded yields in bond portfolios have provided less protection from rising
rates than was the case through much of the 1980's.
The Fund has tended to have a shorter maturity than the bond market index
over the past year, and this helped to dampen the effects of rising rates on
principal values. The Fund's portfolio has been structured to take into
account the discernible flattening of the yield curve over the past year, as
short and medium-term yields have risen even faster than longer rates. The
performance of the Fund's mortgage holdings has been relatively much better
in 1994 than was the case in 1993 when interest rates were still falling and
prepayments on mortgage collateral were accelerating rapidly.
As a result of the maturity and yield curve strategies and an improved
contribution from the mortgage holdings, the Fund's (Class A w/o load) return
in the year ended September 30, 1994 was -2.9% compared with -4.1% for the
Lehman Government/Corporate Bond Index.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First American Fixed Income Fund (without load) $10,000 $10,478 $11,597 $12,386 $14,076 $15,813 $17,268 $16,784
First American Fixed Income Fund (with load) $ 9,625 $10,085 $11,162 $11,921 $13,548 $15,220 $16,620 $16,135
First American Fixed Income Fund -- Class C $10,000 $10,478 $11,597 $12,386 $14,076 $15,813 $17,268 $16,784
Lehman Government/Corporate Bond Index $10,000 $10,656 $11,861 $12,662 $14,672 $16,613 $18,516 $17,750
</TABLE>
Annualized Annualized
One Year 5 Year Inception
Return Return to Date
Class A without load -2.92% 7.65% 8.02%
Class A with load -6.53% 6.83% 7.41%
Class C -2.92% 7.65% 8.02%
The inception date of the Class A shares is 12/22/87 and the inception date
of the Class C shares is 2/4/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Fixed Income Fund
Institutional Class since inception, which is not synthetic, is -4.9%.
MANAGED INCOME FUND**
The short average maturity of the Fund, combined with the relatively high
coupon of the Fund's investments, have dampened a good deal of the adverse
effects of the rise in rates, and the Fund's return has been positive. As a
result, the Fund's (Class A w/o load) cumulative return as of September 30,
1994 was 1.8%.
Interest rates all along the yield curve are likely to decline at least
moderately in the final weeks of 1994.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
3/31/94 Apr-94 May-94 Jun-94 Jul-94 Aug-94 Sep-94
<S> <C> <C> <C> <C> <C> <C> <C>
First American Managed Income Fund (without load) $10,000 $10,009 $10,018 $10,058 $10,105 $10,152 $10,177
First American Managed Income Fund (with load) $ 9,800 $ 9,809 $ 9,818 $ 9,857 $ 9,903 $ 9,949 $ 9,974
First American Managed Income Fund -- Class C $10,000 $10,009 $10,018 $10,058 $10,105 $10,152 $10,167
Merrill Lynch 1-Year Treasury Bill Index $10,000 $ 9,991 $10,004 $10,037 $10,098 $10,133 $10,148
</TABLE>
Cumulative
Inception
to Date
Class A without load 1.79%
Class A with load -0.28%
Class C 1.68%
The inception date of the Class A shares is 12/18/92 and the inception date
of the Class C shares is 8/2/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Cumulative Total Return for the Managed Income Fund
Institutional Class since inception, which is not synthetic, is 0.5%.
Performance is presented for the period beginning 3/25/94, the date First
Bank National Association became the Adviser of the Managed Income Fund.
The inception date of the Fund was 12/18/92. The per share income and
capital changes for this Fund since 12/18/92 can be found in the financial
highlights and the prospectus. The average annual total return figures for
one, five and ten year periods (or from inception) are available upon
request.
INTERMEDIATE GOVERNMENT BOND FUND*
The Fund invests primarily in government securities exempt from state taxes
(except for government-collateralized repurchase agreements used as cash
equivalents). In mid-October of 1993, the bond markets topped out and yields
bottomed. Earlier this year, the Agency market experienced some
disequilibrium as traditional buyers shied away from the fixed income
markets. The Fund was able to purchase Federal Home Loan Bank debt at yield
spreads wider than previously available. This resulted in a total return for
the Fund (Class A w/o load) of -1.1% as of September 30, 1994, as compared to
- -1.5% for the Lehman Intermediate Term Government Bond Index. The Fund's
average maturity has been from a very defensive posture of less than 3 years,
to a stance closer to the benchmark of 3.5 to 4 years, and portfolio
transactions have been implemented mindful of the possibility that the yield
curve may continue to flatten.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First American Intermediate
Government Bond Fund (without load) $10,000 $10,426 $11,241 $12,144 $13,392 $14,581 $15,308 $15,135
First American Intermediate
Government Bond Fund (with load) $ 9,700 $10,114 $10,903 $11,780 $12,990 $14,143 $14,849 $14,681
First American Intermediate
Government Bond Fund -- Class C $10,000 $10,426 $11,241 $12,144 $13,392 $14,581 $15,308 $15,119
Lehman Intermediate-Term Government Bond Index $10,000 $10,575 $11,594 $12,588 $14,298 $16,078 $17,308 $17,048
Merrill Lynch 3-5 Year Treasury Index $10,000 $10,563 $11,556 $12,565 $14,377 $16,403 $17,719 $17,311
</TABLE>
Annualized Annualized
One Year 5 Year Inception
Return Return to Date
Class A without load -1.13% 6.13% 6.40%
Class A with load -4.05% 5.48% 5.92%
Class C -1.24% 6.11% 6.38%
The inception date of the Class A shares is 12/22/87 and the inception date
of the Class C shares is 2/4/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Intermediate Government Bond
Fund Institutional Class since inception, which is not synthetic, is -2.7%.
MORTGAGE SECURITIES FUND**
The Fund had a total return of -0.8% (Class A w/o load) compared with a
return of -1.1% for the Lehman Mortgage-Backed Securities Index in the 12
months ended September 30, 1994.
The Fund had a shorter average maturity than the Mortgage Index during the
past year, and this helped dampen the effects of rising rates.
The Fund emphasizes mortgage securities which are structured to maintain
stable cash flow and average life characteristics in a broad range of
prepayment environments. During 1993, mortgages were adversely effected
because there was a rapid acceleration in collateral prepayments as interest
rates fell. In 1994, the opposite has been that cash prepayments have slowed
and mortgage durations have extended, as interest rates have risen. Many of
the Fund's securities have a substantial degree of protection against the
effects of rapidly changing prepayment experience.
The Fund does not hold any of the highly leveraged mortgage derivative
securities that have caused difficulties for many mortgage and bond
portfolios in the past year.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Mortgage Securities Fund (without load) $10,000 $10,728 $10,643
First American Mortgage Securities Fund (with load) $ 9,625 $10,326 $10,244
First American Mortgage Securities Fund -- Class C $10,000 $10,728 $10,643
Lehman Brothers Mortgage Index $10,000 $10,588 $10,468
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load -0.79% 3.79%
Class A with load -4.49% 1.60%
Class C -0.79% 3.79%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Mortgaged Securities Fund
Institutional Class since inception, which is not synthetic, is -3.3%.
LIMITED TERM TAX FREE INCOME FUND*
Federal rate hikes continue to mount and fall in short rates, and a
sustainable rally at the front end of the yield curve does not appear
imminent. Short municipal rates have not risen proportionately as far as
their Treasury counterparts. This continues to provide a floor under which
municipal rates are unlikely to slide.
The Fund has generally maintained a defensive posture over the past two
quarters. The Fund's cumulative total return as of September 30, 1994 was
1.1% (Class A w/o load) compared to the year-to-date return of 1.8% for the
Lehman 1-Year G.O. Bond Index. Assuming that municipals have little room to
rally without the underpinning of a stronger Treasury market, the current
Fund focus is on accumulating medium-grade and other special situation bonds
which provide yield advantage over high-grades.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
3/31/94 Sep-94
<S> <C> <C>
First American Limited Term Tax-Free Income Fund (without load) $10,000 $10,121
First American Limited Term Tax-Free Income Fund (with load) $ 9,800 $ 9,918
First American Limited Term Tax-Free Income Fund -- Class C $10,000 $10,121
Lehman Brothers 1-Year G.O. Bond Index $10,000 $10,193
</TABLE>
Cumulative
Inception
to Date
Class A without load 1.11%
Class A with load -0.88%
Class C 1.11%
The inception date of the Class A shares is 2/19/93 and the inception date of
the Class C shares is 8/2/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Cumulative Total Return for the Limited Term Tax Free Fund
Institutional Class since inception, which is not synthetic, is 0.3%.
Performance is presented for the period beginning 3/25/94, the date First
Bank National Association became the Adviser of the Limited Term Tax Free
Income Fund. The inception date of the Fund was 2/19/93. The per share
income and capital changes for this Fund since 12/19/92 can be found in the
financial highlights and the prospectus. The average annual total return
figures for one, five and ten year periods (or from inception) are
available upon request.
INTERMEDIATE TAX FREE FUND**
The Fund, formerly called the Municipal Bond Fund, began its investment
fiscal year with a portfolio which gave recognition to the fact that interest
rates had declined sharply for several years, and that some measure of
caution was in order. Starting the year holding a number of premium bonds,
which tend toward less volatility, and with an average effective maturity
below the norm, the Fund portfolio was extended, as to average maturity only,
after the municipal market had reached its early-April bottom. As a result,
the Fund had a total return of -1.3% (Class A w/o load) as of September 30,
1994, compared to -1.2% for the Lehman 7-Year G.O. Index. In its current
configuration, the Fund has an average maturity in excess of seven years, and
is of strong investment quality.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First American Intermediate Tax Free Fund (without load) $10,000 $10,479 $10,989 $11,569 $12,625 $13,537 $14,710 $14,526
First American Intermediate Tax Free Fund (with load) $ 9,700 $10,165 $10,660 $11,222 $12,246 $13,131 $14,268 $14,090
First American Intermediate Tax Free Fund -- Class C $10,000 $10,479 $10,989 $11,569 $12,625 $13,537 $14,710 $14,526
Lehman Brothers 7-Year G.O. Index $10,000 $10,550 $11,253 $12,029 $13,463 $14,745 $16,377 $16,186
</TABLE>
Annualized Annualized
One Year 5 Year Inception
Return Return to Date
Class A without load -1.25% 5.74% 5.76%
Class A with load -4.23% 5.10% 5.28%
Class C -1.25% 5.74% 5.76%
The inception date of the Class A shares is 12/22/87 and the inception date
of the Class C shares is 2/4/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Intermediate Tax Free Fund
Institutional Class since inception, which is not synthetic, is -4.4%.
COLORADO INTERMEDIATE TAX FREE FUND*
The newest bond fund in the First American family, the Colorado Intermediate
Tax-Free Fund, purchased its first bonds on April 4, 1994. This date
represented the low point in the municipal bond market for 1994 through
September 30th. Because that low was viewed as representing at least an
intermediate-term exhaustion of the bond market's downside momentum, the Fund
has an average effective maturity equal to or slightly in excess of its
7-year norm. At September 30th, the portfolio held forty-two different issues
of AA+-average quality, and had a cumulative total return for Class A (w/o
load) of 3.7% which is comparable to the index, the Lehman 7-Year G.O. Bond
Index.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
4/30/94 Sep-94
<S> <C> <C>
First American Colorado Intermediate Tax Free Fund (without load) $10,000 $10,118
First American Colorado Intermediate Tax Free Fund (with load) $ 9,700 $ 9,814
First American Colorado Intermediate Tax Free Fund -- Class C $10,000 $10,128
Lehman Brothers 7-Year G.O. Bond Index $10,000 $10,104
</TABLE>
Cumulative
Inception
to Date
Class A without load 3.66%
Class A with load 0.55%
Class C 3.76%
* The inception date of the Class A shares is 4/4/94 and the inception date
of the Class C shares is 4/4/94.
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND**
Opened at the end of February, 1994, the Minnesota Insured Intermediate Tax
Free Fund experienced a difficult first month, as interest rates rose sharply
in March. Soon after April 1st, however, municipal bonds ceased declining,
and have traded in a narrow range, outperforming their taxable counterparts.
During this period, the Fund grew to over $21 million in size, and a
portfolio of thirty-seven high-quality, Minnesota tax-exempt bonds has been
assembled. As most of this assembly period has been after March's market
decline, the portfolio of bonds has maturity characteristics that represent
an average which is close to what the portfolio's normal structure might be.
Ranging from two to eighteen years to maturity, these bonds have an average
effective maturity of over seven years. Some 81% of the portfolio is composed
of Aaa-insured bonds, or like-rated bonds secured by guarantees of the U.S.
Government or its Agencies. The Funds cumulative total return for Class A
(w/o load) was -1.7% as of September 30, 1994 which is comparable to the
index, the Lehman 7-Year G.O. Bond Index.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
2/28/94 Sep-94
<S> <C> <C>
First American Minnesota Insured
Intermediate Tax Free Fund (without load) $10,000 $ 9,852
First American Minnesota Insured
Intermediate Tax Free Fund (with load) $ 9,700 $ 9,557
First American Minnesota Insured
Intermediate Tax Free Fund -- Class C $10,000 $9,863
Lehman Brothers 7-Year G.O. Bond Index $10,000 $ 9,892
</TABLE>
Cumulative
Inception
to Date
Class A without load -1.68%
Class A with load -4.63%
Class C -1.58%
** The inception date of the Class A shares is 2/28/94 and the inception date
of the Class C shares is 2/28/94.
ASSET ALLOCATION FUND*
The Fund uses recommended asset weightings produced by a quantitative model,
which predicts future asset class returns based on historical experience.
During fiscal year 1994, the quantitative model continued to maintain the
greatest weight in common stocks, as historically low interest rates
contributed to a relatively high equity risk premium. However, as short- and
long-term rates rose during the year, this premium became somewhat less
attractive, and the model steadily lowered the equity allocation while
raising those for bonds and cash.
The Fund began the year with weightings of 89% Standard & Poor's 500 stocks,
6% U.S. Government bonds, and 5% cash equivalents. By year-end, the
allocation was 60% stocks, 21% bonds, and 19% cash. The net result was a
total return of 1.8% (Class A w/o load) on September 30, 1994, as compared to
3.7% for the S&P 500 Index and -4.1% for the Lehman Government/Corporate
Index.
Looking ahead, the quantitative model continues to predict that Standard &
Poor's 500 stocks should produce returns that exceed those of fixed income
investments over the next twelve months. However, the lowering of the model's
weighting suggests that equity returns could be more modest than they have
been in the recent past.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Asset Allocation Fund (without load) $10,000 $10,750 $10,945
First American Asset Allocation Fund (with load) $ 9,550 $10,266 $10,452
First American Asset Allocation Fund -- Class C $10,000 $10,750 $10,940
Standard & Poor's 500 Composite Index $10,000 $10,758 $11,154
Lehman Government/Corporate Bond Index $10,000 $11,138 $10,677
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load 1.81% 5.43%
Class A with load -2.78% 2.77%
Class C 1.77% 5.41%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Asset Allocation Fund
Institutional Class since inception, which is not synthetic, is -1.4%.
BALANCED FUND**
The Fund is currently utilizing a target asset allocation of 60% equities and
40% fixed income, which is a neutral position. This mix reflects the belief
that the comparative investment opportunity for stocks and bonds conforms to
historical norms at this time. The Fund returned 3.0% (Class A w/o load) over
the past year. This compares to the Standard & Poor's 500 which produced a
total return of 3.7% and the Lehman Government/Corporate Index which returned
- -4.1% for the year ended September 30, 1994.
Stocks of companies, sensitive to the level of economic activity, comprise a
majority of the Fund's equity portfolio. Stocks of suppliers of basic
industrial commodities, capital goods, and technological products are
prominent in the portfolio and reflect the expectation that the current
global economic expansion will be long lived.
The Fund's fixed income portfolio mix of Treasuries, quality corporates, and
conservatively structured mortgage-backed securities, had an average maturity
somewhat shorter than the market index during the major portion of the 1994
rise in interest rates. This strategy helped dampen the adverse effect of
higher yields on portfolio returns. The Fund's average maturity is somewhat
longer now in anticipation of a moderate decline in interest rates that is
expected to extend through the remainder of the year and perhaps into 1995.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Balanced Fund (without load) $10,000 $10,978 $11,310
First American Balanced Fund (with load) $ 9,550 $10,484 $10,801
First American Balanced Fund -- Class C $10,000 $10,978 $11,316
Standard & Poor's 500 Composite Index $10,000 $10,758 $11,154
Lehman Government/Corporate Bond Index $10,000 $11,138 $10,677
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load 3.02% 7.43%
Class A with load -1.65% 4.71%
Class C 3.08% 7.46%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Balanced Fund Institutional
Class since inception, which is not synthetic, is -1.0%.
EQUITY INDEX FUND*
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Equity Index Fund (without load) $10,000 $10,751 $11,100
First American Equity Index Fund (with load) $ 9,550 $10,267 $10,601
First American Equity Index Fund -- Class C $10,000 $10,751 $11,100
Standard & Poor's 500 Composite Index $10,000 $10,758 $11,154
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load 3.25% 6.26%
Class A with load -1.40% 3.58%
Class C 3.27% 6.28%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Equity Index Fund
Institutional Class since inception, which is not synthetic, is 0.3%.
EQUITY INCOME FUND**
Since its change in adviser on March 25, 1994, the Fund has performed well in
comparison to broad indices of balanced investment strategies. The Fund had a
cumulative total return of 2.8% (Class A w/o load) as compared to 1.3% and
- -3.9% for the year-to-date total returns of the S&P 500 and the Lehman
Government Corporate Index.
Portfolio turnover during the quarter ended September 30, 1994 was high, as
the Fund moved away from fixed income investments, and increased its emphasis
on higher-yielding equity. The Fund must now invest at least 80% in equity
securities. The intent of this change is to produce a growing income stream
that has the ability to outpace inflation. To that end, the Fund has recently
increased its holdings in Real Estate Investment Trusts (REITs), which should
offer relative stability and strong dividend increases in the years ahead.
For exposure to more cyclical areas that will benefit from the expanding
economy, the Fund has also recently added such issues as convertible shares
of Inco, a major nickel producer, as well as shares in the royalty trust of
Great Northern Ore.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
3/31/94 Sep-94
<S> <C> <C>
First American Equity Income Fund (without load) $10,000 $10,355
First American Equity Income Fund (with load) $ 9,550 $ 9,889
First American Equity Income Fund -- Class C $10,000 $10,355
Standard & Poor's 500 Composite Index $10,000 $10,532
Lehman Government/Corporate Bond Index $10,000 $ 9,926
</TABLE>
Cumulative
Inception
to Date
Class A without load 2.81%
Class A with load -1.78%
Class C 2.81%
The inception date of the Class A shares is 12/18/92 and the inception date
of the Class C shares is 8/2/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Cumulative Total Return for the Equity Income Fund
Institutional Class since inception, which is not synthetic, is 0.5%.
Performance is presented for the period beginning 3/25/94, the date First
Bank National Association became the Adviser of the Equity Income Fund. The
inception date of the Fund was 12/18/92. The per share income and capital
changes for this Fund since 12/18/92 can be found in the financial
highlights and the prospectus. The average annual total return figures for
one, five and ten year periods (or from inception) are available upon
request.
DIVERSIFIED GROWTH FUND*
Since its change in adviser on March 25, 1994, the Fund endured one quarter
of weak market performance, and then rebounded strongly during the quarter
ending September 30, 1994. The Fund's cumulative total return was 0.4% (Class
A w/o load) as of September 30, 1994, as compared to a year-to-date total
return for the S&P 500 Index of 1.3%. This strong performance was led by the
portfolio's technology, healthcare, and cyclical holdings.
The Fund is pursuing a strategy of gaining exposure to positive economic
developments. This theme is reflected in some of the Fund's more recent
acquisitions, which include York International, Inc., a heating/air
conditioning manufacturer; Inco, a nickel producing company; and Nokia, a
leading Finnish manufacturer of cellular telephone equipment.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
3/31/94 Sep-94
<S> <C> <C>
First American Diversified Growth Fund (without load) $10,000 $10,276
First American Diversified Growth Fund (with load) $ 9,550 $ 9,814
First American Diversified Growth Fund -- Class C $10,000 $10,288
Standard & Poor's 500 Composite Index $10,000 $10,532
</TABLE>
Cumulative
Inception
to Date
Class A without load 0.40%
Class A with load -4.13%
Class C 0.51%
The inception date of the Class A shares is 12/18/92 and the inception date
of the Class C shares is 8/2/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Cumulative Total Return for the Diversified Growth Fund
Institutional Class since inception, which is not synthetic, is 2.4%.
Performance is presented for the period beginning 3/25/94, the date First
Bank National Association became the Adviser of the Diversified Growth
Fund. The inception date of the Fund was 12/18/92. The per share income and
capital changes for this Fund since 12/18/92 can be found in the financial
highlights and the prospectus. The average annual total return figures for
one, five and ten year periods (or from inception) are available upon
request.
STOCK FUND**
The Fund employs a value discipline in the selection of equities that focuses
on companies which are expected to demonstrate improving profitability and
are valued both at a discount to the appraisal of fair value, and at
below-average valuation ratios when compared with the broad market averages.
Companies represented in the portfolio must also show a significant element
of change or catalyst that, as it becomes recognized by investors, will
support appreciation of the stock to its projected fair value. During the
fiscal year ended September 30, 1994, the Stock Fund produced a total return
of 8.4% (Class A w/o load). This return compares favorably with 3.7% for the
Standard & Poor's 500 Index.
The Fund benefitted from a heavy emphasis on capital goods and technology,
sectors recognized to have significant profit potential in both the
competitive restructuring of American industry and the extended expansion of
the global economy. Companies undergoing significant change by focusing
product lines, reducing costs, or changing operating culture or management,
have also proven successful investments for the Fund, as were stocks of basic
commodities producers, such as aluminum, nickel, and paper. The combination
of limited capacity and rising global demand for industrial commodities
produced rising product prices and the expectation of strong profit
potential. The stocks of firms that can prosper from product sales in rapidly
growing international markets will be of increasing interest to the portfolio
in the coming year.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First American Stock Fund (without load) $10,000 $10,489 $13,091 $12,116 $15,223 $16,423 $19,021 $20,609
First American Stock Fund (with load) $ 9,550 $10,017 $12,502 $11,571 $14,538 $15,684 $18,165 $19,682
First American Stock Fund -- Class C $10,000 $10,489 $13,091 $12,116 $15,223 $16,423 $19,021 $20,609
Standard & Poor's 500 Composite Index $10,000 $11,312 $15,044 $13,654 $17,911 $19,891 $22,476 $23,303
</TABLE>
Annualized Cumulative
One Year Inception Inception
Return to Date to Date
Class A without load 8.35% 9.50% 11.35%
Class A with load 3.50% 8.50% 10.60%
Class C 8.35% 9.50% 11.35%
The inception date of the Class A shares is 12/22/87 and the inception date
of the Class C shares is 2/4/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Stock Fund Institutional
Class since inception, which is not synthetic, is 2.6%.
SPECIAL EQUITY FUND*
Over the past year, the Fund generated a total return of 18.7% (Class A w/o
load). This performance compares favorably to the 3.7% return of the Standard
& Poor's 500 Index for the same period.
The Fund's performance for this period benefitted from investments in the
such sectors as paper manufacturing and metals and mining, where share price
levels in the calendar year 1994 rose sharply from the depressed levels of
the second half of 1993. In the latter industry, the Fund focused on
producers of aluminum and nickel, two commodities which had fallen well below
the price at which expansion is justified. Now that utilization of these
metals is on the rise, there should strong profit growth, without the need
for spending on new production facilities.
The Fund's performance also benefitted from its investment in smaller
companies where investment research coverage is modest, but where the
fundamentals are improving. One such company is Stolt-Nielsen, which operates
vessels for the transport of specialty chemical. With world trade growing,
demand for the company's shipping services should also grow, improving
profitability.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First American Special Equity Fund (without load) $10,000 $11,752 $13,901 $12,505 $15,527 $17,883 $21,265 $25,241
First American Special Equity Fund (with load) $ 9,550 $11,223 $13,275 $11,942 $14,829 $17,078 $20,308 $24,105
First American Special Equity Fund -- Class C $10,000 $11,752 $13,901 $12,505 $15,527 $17,883 $21,265 $25,252
Standard & Poor's 500 Composite Index $10,000 $11,312 $15,044 $13,654 $17,911 $19,891 $22,476 $23,303
NASDAQ Index $10,000 $11,732 $14,311 $10,426 $15,944 $17,650 $23,083 $23,127
</TABLE>
Annualized Cumulative
One Year Inception Inception
Return to Date to Date
Class A without load 18.70% 12.67% 14.72%
Class A with load 13.39% 11.65% 13.95%
Class C 18.75% 12.68% 14.73%
The inception date of the Class A shares is 12/22/87 and the inception date
of the Class C shares is 2/4/94.
* Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Special Equity Fund
Institutional Class since inception, which is not synthetic, is 11.2%.
REGIONAL EQUITY FUND**
The Fund generated a total return of 6.8% (Class A w/o load) for the year
ending September 30, 1994 which compares favorably to the 2.7% return for the
Frank Russell 2000 Index for the same period.
The Fund invests primarily in equity securities of small companies
headquartered in Minnesota, North and South Dakota, Wisconsin, Iowa,
Nebraska, Colorado, Montana, Michigan, and Illinois. Performance has
benefitted from an emphasis on companies with two criteria: (1) they can
thrive due to skilled management, innovative products, effective cost
controls, and little dependence on price increases, and (2) their stocks
currently have below-average price/earnings ratios due to low name
recognition outside of the Upper Midwest. The portfolio has generally been
concentrated in technology, consumer cyclical, and financial services stocks.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
12/31/92 Sep-93 Sep-94
<S> <C> <C> <C>
First American Regional Equity Fund (without load) $10,000 $11,667 $12,456
First American Regional Equity Fund (with load) $ 9,550 $11,142 $11,895
First American Regional Equity Fund -- Class C $10,000 $11,667 $12,456
Standard & Poor's 500 Composite Index $10,000 $10,758 $11,154
Frank Russell 2000 Stock Index $10,000 $11,585 $11,894
</TABLE>
Annualized
One Year Inception
Return to Date
Class A without load 6.76% 14.89%
Class A with load 1.99% 11.99%
Class C 6.83% 14.93%
The inception date of the Class A shares is 12/14/92 and the inception date
of the Class C shares is 2/4/94.
** Total Returns for periods prior to the inception date of C shares were
calculated using synthetic returns since inception of the Class A shares
w/o load. The Annualized Total Return for the Regional Equity Fund
Institutional Class since inception, which is not synthetic, is 2.2%.
EMERGING GROWTH FUND
Since its inception on April 4, 1994, the Fund has performed well in relation
to its benchmark. The Fund focuses on smaller-capitalization companies, which
were weak during the Fund's first quarter of operation, but came back
strongly during the quarter ending September 30, 1994, resulting in a 5.9%
cumulative total return for Class A (w/o load) as of September 30, 1994,
compared to a year-to-date total return of 0.04% for the Frank Russell 2000
Index.
Examples include Quorum Health Group, a managed care company, and Target
Therapeutics, a manufacturer of specialized healthcare products. Both
companies' shares performed well during the third quarter, in part due to the
postponement of legislative action on healthcare reform.
The Fund is currently focusing on healthcare and technology issues, in the
belief that these sectors offer the greatest potential for future growth.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
4/30/94 Sep-94
<S> <C> <C>
First American Emerging Growth Fund (without load) $10,000 $10,472
First American Emerging Growth Fund (with load) $ 9,550 $10,000
First American Emerging Growth Fund -- Class C $10,000 $10,453
Frank Russell 2000 Stock Index $10,000 $10,217
Standard & Poor's 500 Composite Index $10,000 $10,399
</TABLE>
Cumulative
Inception
to Date
Class A without load 5.88%
Class A with load 1.12%
Class C 5.68%
* The inception date of the Class A shares is 4/4/94 and the inception date
of the Class C shares is 4/4/94.
TECHNOLOGY FUND
Since its inception on April 4, 1994, the Fund has significantly outperformed
its benchmark. During the second fiscal quarter, the Fund recorded negative
performance, as technology stocks fell out of favor overall. However, the
Fund held firm in its positions, and was rewarded when many technology issues
posted double-digit -- and even triple-digit -- gains during the third
quarter. The Fund's cumulative total return for Class A (w/o load) was 11.9%
as of September 30, 1994, compared to the year-to-date total return of 7.1%
for the Lipper Science & Technology Index.
The technology sector continues to display strong fundamentals, as corporations
invest in technologies that offer the potential to improve productivity. The
Fund is currently focusing on companies in the telecommunications equipment,
semiconductor fabrication equipment, and client/server computing areas. In
particular, the Fund currently holds shares of Tellabs, DSC Communications, and
Nokia in the telecommunications field; FSI, International in the semiconductor
fabrication field, and Informix and Network Peripherals in the client/server
computing field.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
4/30/94 Sep-94
<S> <C> <C>
First American Technology Fund (without load) $10,000 $11,572
First American Technology Fund (with load) $ 9,550 $11,051
First American Technology Fund -- Class C $10,000 $11,584
Lipper Science & Technology Average $10,000 $10,743
Standard & Poor's 500 Composite Index $10,000 $10,399
</TABLE>
Cumulative
Inception
to Date
Class A without load 11.90%
Class A with load 6.88%
Class C 11.90%
** The inception date of the Class A shares is 4/4/94 and the inception date
of the Class C shares is 4/4/94.
INTERNATIONAL FUND*
Since inception on April 4, the Fund underperformed the MSCI EAFE Index in
the second quarter of 1994 and outperformed in the third quarter. As a
result, the Fund's cumulative total return for Class A (w/o load) was 2.3%,
compared to the year-to-date total return of 8.9% for the MSCI and EAFE
Index.
The second quarter was characterized by continued volatility in the world
markets caused by a currency crisis in the dollar and the prospect of
continuing increases in U.S. short-term interest rates. Despite significant
corrections in the last two quarters, stock markets in Malaysia, Hong Kong,
Singapore, and Mexico maintained their long-term secular uptrends by
substantially outperforming the EAFE Index over the past 12 months. Japan's
performance improved for the quarter, reflecting the added benefit of a
rising currency. Europe slightly underperformed in total return over the past
year.
The third quarter was marked by a general rise in worldwide stock prices. The
U.S. dollar crisis abated, and worldwide economic statistics were more
positive. In the U.S., fears of a resurgence of inflation replaced concerns
of economic stasis. In Japan, the economy continued to disappoint, and stocks
corrected after having been up strongly in the first half of the year. Stock
markets in Mexico, Malaysia, Hong Kong, and Singapore all rebounded in the
third quarter and, on a 12-month basis, continue to substantially outperform
the EAFE Index. Europe was also up, albeit slightly, and on a 12-month basis
is now ahead of the EAFE Index.
With assets currently at $48 million, the Fund's strategy continues to be
focused on (1) the secular growth opportunities presented by Latin America
and Greater China, (2) an increasing position in Japan concentrating on
consumer and technology companies, (3) an underweighting of Europe, and (4)
an emphasis on the service, telecommunications, and capital equipment
industries.
VALUE OF $10,000 INVESTMENT
[GRAPH]
Past performance of the portfolio is not indicative of future performance.
<TABLE>
<CAPTION>
4/30/94 Sep-94
<S> <C> <C>
First American International Equity Fund (without load) $10,000 $10,039
First American International Equity Fund (with load) $ 9,550 $ 9,587
First American International Equity Fund -- Class C $10,000 $10,049
Morgan Stanley EAFE Index $10,000 $10,097
</TABLE>
Cumulative
Inception
to Date
Class A without load 2.30%
Class A with load -2.30%
Class C 2.20%
* The inception date of the Class A shares is 4/7/94 and the inception date
of the Class C shares is 4/4/94.
STATEMENT OF NET ASSETS----SEPTEMBER 30, 1994
LIMITED TERM INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
ASSET BACKED SECURITIES--80.3%
Auto Bond Receivables Trust 1993-1 A
6.125%, 11/15/98 $2,322 $2,266
BCI Home Equity Loan 1991-1 A1
7.100%, 09/15/06 127 127
BCI Home Equity Loan 1994-1 B (C)
5.663%, 10/29/94 3,112 3,124
Boulevard Auto Trust 1993-1 A
4.550%, 03/15/98 1,867 1,838
CFC Grantor Trust TR14 A (B)
7.150%, 11/15/06 1,208 1,194
Chemical Bank Grantor Trust 1988-B A
9.100%, 10/15/94 782 783
Chemical Financial Acceptance
Corporation 1991-A A
6.450%, 12/15/97 2,228 2,219
Comdisco Receivables Trust 1992-A A2
6.100%, 05/15/97 524 524
Household Finance Home Equity
Loan 1991-3 A3
6.100%, 11/20/06 3,312 3,285
Household Finance Home Equity
Loan 1992-1 A3
5.800%, 05/20/07 172 170
Merrill Lynch Home Equity Loan 1991-1A
7.600%, 05/15/16 404 404
Midlantic Automobile Grantor
Trust 1992-1 B
5.150%, 09/15/97 2,498 2,484
Olympic Automobile Receivables
Trust 1993-D A
4.650%, 07/15/00 3,488 3,387
Olympic Automobile
Receivables
Trust 1993-B A
4.950%, 10/15/99 3,256 3,180
Olympic Automobile Receivables
Trust 1993-C B
4.600%, 02/15/00 2,937 2,839
Orix Credit Alliance Owner
Trust 1993-A A2
4.300%, 08/17/98 3,394 3,324
Premier Auto Trust 1992-1 A (B)
5.750%, 07/15/97 1,035 1,032
Premier Auto Trust 1992-3 A
5.900%, 11/15/97 130 129
Premier Auto Trust 1992-5 A
4.550%, 03/15/98 2,635 2,569
Premier Auto Trust 1992-5 B
4.900%, 12/15/95 2,059 2,021
Premier Auto Trust 1993-4 A2
4.650%, 02/02/99 2,487 2,417
Premier Auto Trust 1993-4 B
4.950%, 02/02/99 $3,252 $3,161
RCI Vacation Ownership
Mortgage Trust 1991-B (B)
7.500%, 08/25/98 2,482 2,470
Security Pacific Home Equity 1991-A A1
8.250%, 03/10/06 95 95
The Money Store Home Equity
Trust 1992-D1 A1
6.500%, 01/15/04 2,003 1,979
The Money Store Home Equity
Trust 1993-B A1
5.400%, 08/15/05 3,920 3,845
Union Federal Savings Bank
Trust 1993-B A
4.450%, 11/15/99 2,486 2,425
Western Financial Grantor
Trust 1991-3 A
6.750%, 01/01/97 472 473
Western Financial Grantor
Trust 1993-2 A2
4.700%, 10/01/98 3,625 3,529
Western Financial Grantor
Trust 1993-4 A1
4.600%, 04/01/99 3,723 3,588
Zions Auto Trust 1993-1 B
5.650%, 06/15/99 3,242 3,170
TOTAL ASSET BACKED SECURITIES
(Cost $65,339) 64,051
OTHER MORTGAGE BACKED OBLIGATIONS--9.2%
Mortgage Capital Funding 1993-C1 A1
5.250%, 05/25/15 2,660 2,616
Mortgage Obligation Structured
Trust 1993-1 A1
6.350%, 10/25/18 2,120 2,070
Resolution Trust 1992-11 A1A
7.000%, 10/25/24 1,975 1,975
Resolution Trust 1992-C7 B
7.150%, 06/25/23 683 673
TOTAL OTHER MORTGAGE BACKED OBLIGATIONS
(Cost $7,465) 7,334
MASTER NOTES--10.2%
Associates Corporation of
North America (A)
4.813%, 10/04/94 1,367 1,367
Barclays (A)
4.779%, 10/03/94 2,243 2,243
Goldman Sachs (A)
4.950%, 10/04/94 2,207 2,207
Heller Financial
4.935%, 10/4/94 (A) $2,342 $ 2,342
TOTAL MASTER NOTES
(COST $8,159) 8,159
TOTAL INVESTMENTS--99.7%
(Cost $80,963) 79,544
OTHER ASSETS AND LIABILITIES--0.3%
OTHER ASSETS AND LIABILITIES 232
NET ASSETS
PORTFOLIO
SHARES--INSTITUTIONAL CLASS
($.0001 PAR VALUE--2 BILLION
AUTHORIZED) BASED ON 7,133,617
OUTSTANDING SHARES 71,349
PORTFOLIO SHARES--RETAIL CLASS
A ($.0001 PAR VALUE--2 BILLION
AUTHORIZED) BASED ON 965,349
OUTSTANDING SHARES 9,750
PORTFOLIO SHARES--RETAIL CLASS
B ($.0001 PAR VALUE--2 BILLION
AUTHORIZED) BASED ON 102
OUTSTANDING SHARES 1
UNDISTRIBUTED NET INVESTMENT
INCOME 72
ACCUMULATED NET REALIZED GAIN
ON INVESTMENTS 23
NET UNREALIZED DEPRECIATION OF
INVESTMENTS (1,419)
TOTAL NET ASSETS:--100.0% $79,776
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $ 9.85
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS A $ 9.85
MAXIMUM SALES CHARGE OF 2.00% (1) .20
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 10.05
NET ASSET VALUE AND OFFERING
PRICE PER SHARE--RETAIL CLASS
B (2) $ 9.84
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
(B) Security sold within terms of a private placement memorandum, exempt from
registration under section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited
investors." These securities have been determined to be liquid under the
guidelines established by the Board of Directors.
(C) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.00%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TERM INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
ASSET BACKED SECURITIES--9.6%
BW Home Equity Trust 1990-1 1
9.250%, 09/15/05 $ 34 $ 35
Chemical Financial Acceptance 1991-A 1
6.450%, 12/15/97 813 810
Fleet Finance Home Equity 1990-1
8.900%, 01/16/06 140 142
Household Finance Home
Equity 1993-2 A3
4.650%, 12/20/08 3,013 2,866
Olympic Auto Receivables Trust 1993-D
4.750%, 07/15/00 2,557 2,480
Olympic Auto Receivables Trust 1994-A
5.700%, 01/15/01 563 552
TOTAL ASSET BACKED SECURITIES
(COST $7,110) 6,885
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--8.9%
FHLMC
6.000%, 11/15/08 3,500 2,973
7.550%, 05/15/20 731 734
8.000%, 10/15/20 2,630 2,645
FNMA
14.750%, 03/01/12 1 1
U.S. GOVERNMENT AGENCY MORTGAGE BACKED
OBLIGATIONS (Cost $6,803) 6,353
OTHER MORTGAGE BACKED OBLIGATIONS--10.4%
Drexel Burnham Lambert Trust S2
9.000%, 08/01/18 108 110
GECMS 1994-12 A4
6.000%, 04/25/09 2,925 2,642
Kidder Peabody Mortgage Assets Trust 6F
7.950%, 07/20/18 876 881
MDC Mortgage Funding P3
8.200%, 11/20/17 34 34
Morgan Stanley Mortgage Trust W5
9.050%, 05/01/18 202 206
Prudential Home Mortgage
Securities 1992-6 A3
7.000%, 04/25/99 2,100 2,051
Resolution Trust 1991-M6 B2
7.000%, 06/25/21 1,535 1,517
OTHER MORTGAGE BACKED OBLIGATIONS
(Cost $7,498) 7,441
U.S. TREASURY OBLIGATIONS--55.1%
U.S. Treasury Note
4.625%, 02/15/96 $ 6,055 $ 5,924
5.750%, 10/31/97 7,565 7,313
5.125%, 11/30/98 11,015 10,206
6.375%, 01/15/00 4,230 4,060
6.250%, 02/15/03 13,065 11,999
U.S. TREASURY OBLIGATIONS
(Cost $40,512) 39,502
CORPORATE OBLIGATIONS--7.4%
Bear Stearns
6.500%, 06/15/00 2,800 2,573
Farmers Group
8.250%, 07/15/96 320 326
GMAC
7.650%, 01/16/98 2,385 2,385
CORPORATE OBLIGATIONS (Cost $5,701) 5,284
MASTER NOTES--8.8%
Associates Corporation of North America
4.813%, 10/04/94 (A) 1,631 1,631
Barclays
4.779%, 10/03/94 (A) 1,364 1,364
Goldman Sachs
4.950%, 10/04/94 (A) 1,433 1,433
Heller Financial
4.935%, 10/04/94 (A) 1,915 1,915
MASTER NOTES (Cost $6,343) 6,343
TOTAL INVESTMENTS--100.2%
(Cost $73,967) 71,808
OTHER ASSETS AND LIABILITIES--(0.2%)
OTHER ASSETS AND LIABILITIES, NET (155)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
7,163,523 outstanding
shares $71,418
Portfolio
shares--Retail Class
A $.0001 par value--2
billion authorized)
based on 335,760
outstanding shares 3,367
Accumulated net
realized loss on
investments (973)
Net unrealized
depreciation of
investments (2,159)
TOTAL NET
ASSETS:--100.0% $71,653
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 9.55
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.55
MAXIMUM SALES CHARGE
OF 3.75%+ .37
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 9.92
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or the demand date.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors". Pursuant to guidelines adopted by the Board of
Directors, this issue is determined to be liquid.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GMAC--General Motors Acceptance Corporation
GECMS--General Electric Capital Marketing Service
The accompanying notes are an integral part of the financial statements.
FIXED INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
U.S. TREASURY OBLIGATIONS--72.9%
U.S. Treasury Bond
7.250%, 08/15/22 $23,730 $21,886
U.S. Treasury Note
4.625%, 02/15/96 15,335 15,002
5.750%, 10/31/97 3,080 2,977
5.125%, 02/28/98 5,000 4,710
5.125%, 11/30/98 10,990 10,182
6.000%, 10/15/99 2,250 2,130
6.375%, 01/15/00 3,000 2,879
6.250%, 02/15/03 12,195 11,201
U.S. Treasury STRIPS
02/15/99 1,055 773
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $74,260) 71,740
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--1.2%
FHLMC
6.000%, 11/15/08 1,275 1,083
8.000%, 06/15/20 1 1
FNMA
8.500%, 08/25/18 100 102
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE BACKED OBLIGATIONS
(Cost $1,338) 1,186
CORPORATE DEBT OBLIGATIONS--8.7%
Bear Stearns
9.125%, 04/15/98 1,000 1,043
8.750%, 03/15/04 1,000 1,009
Farmers Group
8.250%, 07/15/96 1,755 1,790
General Foods
6.000%, 06/15/01 1,440 1,289
General Motors Acceptence
6.150%, 05/11/98 2,025 1,925
Morgan Stanley Group
7.320%, 01/15/97 250 251
Nationsbank
7.750%, 08/15/04 1,000 955
Torchmark
9.625%, 05/01/98 250 263
TOTAL CORPORATE DEBT OBLIGATIONS
(Cost $8,752) 8,525
OTHER MORTGAGE BACKED OBLIGATIONS--9.7%
Collateralized Mortgage
Securities 88-13 C
8.000%, 09/20/19 152 152
Countrywide Mortgage Backed
Securities 1994-G A3
6.500%, 04/25/24 $ 2,380 $ 2,164
Drexel Burnham Lambert Trust S-2
9.000%, 08/01/18 941 961
General Electric Capital Marketing
Services 1994-12 A4
6.000%, 04/25/09 3,125 2,824
Morgan Stanley Mortgage
Trust W-5
9.050%, 05/01/18 48 49
Prudential Home Mortgage
Securities 1992-6 A3
7.000%, 04/25/99 900 879
Residential Funding 1992-36 A2 P11
5.700%, 11/25/07 1,348 1,303
Resolution Trust 1991-M6 B2
7.000%, 06/25/21 (B) 1,212 1,198
TOTAL OTHER MORTGAGE BACKED
OBLIGATIONS (Cost $9,774) 9,530
ASSET BACKED SECURITIES--1.3%
BW Home Equity Trust 1990-1 1
9.250%, 09/15/05 110 111
Dillon Reed Structured Finance
1993-K1 A1
6.660%, 08/15/10 602 507
Olympic Auto Receivables Trust 1994-A
5.700%, 01/15/01 724 710
TOTAL ASSET BACKED SECURITIES
(Cost $1,367) 1,328
MASTER NOTES--7.9%
Associates Corporation of North America
4.813%, 10/04/94 (A) 2,553 2,553
Goldman Sachs
4.950%, 10/04/94 (A) 2,824 2,824
Heller Financial
4.935%, 10/04/94 (A) 2,361 2,361
TOTAL MASTER NOTES
(Cost $7,738) 7,738
REPURCHASE AGREEMENTS--4.8%
J.P. Morgan 4.594%, dated 09/30/94, matures
10/03/94, repurchase price $2,245,296
(collateralized by a U.S. Treasury Note,
par value $12,149,025, maturity 02/15/15,
market value $2,289,362) 2,244
Merrill Lynch 4.562%, dated 09/30/94,
matures 10/03/94, repurchase price
$2,431,224 (collateralized by a U.S.
Treasury Note, par value $2,470,486,
interest rate of 4.25%, maturity of
01/31/95, market value of $2,479,392) $ 2,431
TOTAL REPURCHASE AGREEMENTS
(Cost $4,675) 4,675
TOTAL INVESTMENTS--106.5%
(Cost $107,904) 104,722
OTHER ASSETS AND LIABILITIES--(6.5%)
OTHER ASSETS AND LIABILITIES, NET (6,392)
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 8,700,311 outstanding shares 93,441
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
774,206 outstanding shares 8,473
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based on
11,135 outstanding shares 116
Undistributed net investment income 6
Accumulated net realized loss on
investments (524)
Net unrealized depreciation
of investments (3,182)
TOTAL NET ASSETS:--100.0% $ 98,330
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 10.37
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.37
MAXIMUM SALES CHARGE OF 3.75% (1) .40
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.77
NET ASSET VALUE AND OFFERING
PRICE PER SHARE--RETAIL CLASS B (2) $ 10.35
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or the demand date.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
STRIPS--Separately Trading of Registered Interest and Prinicpal of
Securities
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
MANAGED INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
ASSET BACKED SECURITIES--14.6%
Capital Auto Receivable Asset
Trust, A 1993-1
5.850%, 02/15/98 $1,312 $1,291
HFC Home Equity Loan Trust,
1992-2
6.850%, 11/20/12 2,241 2,196
Leasing Solution Receivable,
1994-1
5.575%, 03/15/99 1,770 1,752
Orix Credit Alliance Owner Trust,
1993-A
4.600%, 08/17/98 2,263 2,214
TOTAL ASSET BACKED SECURITIES
(Cost $7,514) 7,453
CORPORATE OBLIGATIONS--62.0%
AEROSPACE & DEFENSE--1.5%
Lockheed
4.570%, 05/11/95 750 744
AUTO/RENTAL--1.0%
Hertz
8.000%, 04/01/95 500 504
BANKING--3.0%
Citicorp
8.625%, 11/15/94 500 501
Fleet/Norstar Financial Group
10.200%, 09/15/95 1,000 1,034
TOTAL BANKING 1,535
BUSINESS CREDIT--3.9%
International Lease & Finance
7.000%, 11/07/94 500 501
Xerox Credit
9.500%, 11/01/94 500 501
5.375%, 07/15/95 1,000 992
TOTAL BUSINESS CREDIT 1,994
CHEMICALS--1.0%
7.830%, 05/09/95 500 505
ENERGY & POWER UTILITIES--4.7%
Houston Light & Power
8.625%, 01/15/96 1,000 1,024
Pacific Gas & Electric
4.500%, 06/01/96 725 699
Pacificorp
8.410%, 02/01/95 700 704
TOTAL ENERGY & POWER UTILITIES 2,427
FINANCE--2.0%
Heller Financial
6.500%, 11/15/95 1,000 998
FINANCE - RECEIVABLES--1.9%
IBM Credit
5.130%, 08/11/95 $1,000 $ 990
FOOD & BEVERAGE--2.0%
ConAgra
9.190%, 06/30/95 1,000 1,020
INSURANCE--2.8%
Provident Life Capital
9.650%, 12/01/94 1,425 1,432
MACHINERY--1.5%
Tenneco
9.625%, 11/15/94 750 754
MEDICAL PRODUCTS & SERVICES--1.0%
Baxter International
8.200%, 04/01/95 500 504
PAPER & PAPER PRODUCTS--0.9%
International Paper
9.625%, 10/15/95 450 465
PERSONAL CREDIT--10.3%
American General Finance
9.500%, 12/15/94 750 755
7.300%, 10/16/95 500 504
Beneficial
6.060%, 06/30/95 1,000 999
Commercial Credit Group
6.950%, 10/01/94 500 500
Discover Credit
6.680%, 05/15/95 500 502
Household Finance
9.250%, 04/01/95 500 501
ITT Financial
7.125%, 10/01/94 1,000 1,002
Nordstrom Credit
8.750%, 03/20/95 500 504
TOTAL PERSONAL CREDIT 5,267
PETROLEUM REFINING--2.0%
Ashland Oil
9.875%, 09/01/95 500 514
Atlantic Richfield
10.375%, 07/15/95 500 516
TOTAL PETROLEUM REFINING 1,030
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--1.4%
Eastman Kodak
9.200%, 01/15/95 700 705
RAILROADS--0.5%
Union Pacific
9.160%, 09/25/95 $ 250 $ 256
RETAIL--4.9%
Dayton Hudson
4.820%, 04/01/96 1,000 970
Super Valu Stores
5.875%, 11/15/95 750 743
Wendy's International
12.125%, 04/01/95 750 767
TOTAL RETAIL 2,480
SECURITY & COMMODITY BROKERS--9.3%
Goldman Sachs
7.000%, 11/29/94 1,170 1,171
Lehman Brothers
12.500%, 10/15/94 615 616
6.000%, 12/30/94 1,000 1,000
Salomon
4.600%, 01/15/95 1,000 995
4.800%, 05/15/95 1,000 990
TOTAL SECURITY & COMMODITY BROKERS 4,772
SEMI-CONDUCTORS & RELATED DEVICES--1.1%
Intel Overseas, Zero
Coupon
0.00%, 05/15/95 608 584
TELEPHONES & TELECOMMUNICATION--1.5%
Southwestern Bell
9.000%, 07/17/95 750 762
TOBACCO--3.8%
Philip Morris
6.250%, 06/05/95 1,000 1,000
8.875%, 07/01/96 900 927
TOTAL TOBACCO 1,927
TOTAL CORPORATE OBLIGATIONS
(Cost $33,146) 31,655
FLOATING RATE CORPORATE NOTES--7.8%
Chemical Banking
5.237%, 02/15/95 (A) 1,000 1,000
Citicorp
8.633%, 12/15/95 (A) 1,000 1,002
FNMA
4.910%, 04/16/95 (A) 1,000 999
Lockheed
5.325%, 05/11/95 (A) 1,000 1,000
TOTAL FLOATING RATE CORPORATE NOTES
(Cost $4,062) 4,001
U.S. GOVERNMENT AGENCY OBLIGATIONS--1.9%
FHLMC
4.750%, 01/15/01 $1,000 $ 963
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost $1,004) 963
MASTER NOTES--11.7%
Associates Corporation of North America
4.813%, 10/04/94 (B) 1,355 1,355
Barclays Bank
4.779%, 10/03/94 (B) 1,554 1,554
Goldman Sachs
4.950%, 10/04/94 (B) 1,375 1,375
Heller Financial
4.935%, 10/04/94 (B) 1,695 1,695
TOTAL MASTER NOTES (Cost $5,979) 5,979
TOTAL INVESTMENTS--98.0%
(Cost $51,705) 50,051
OTHER ASSETS AND LIABILITIES--2.0%
OTHER ASSETS AND LIABILITIES, NET 1,014
NET ASSETS
PORTFOLIO SHARES--INSTITUTIONAL CLASS (NO
PAR VALUE--UNLIMITED AUTHORIZATION) BASED
ON 4,735,847 OUTSTANDING SHARES 48,140
PORTFOLIO SHARES--RETAIL CLASS A (NO PAR
VALUE--UNLIMITED AUTHORIZATION) BASED ON
631,025 OUTSTANDING SHARES 6,451
UNDISTRIBUTED NET INVESTMENT INCOME 8
ACCUMULATED NET REALIZED LOSS IN
INVESTMENTS (1,880)
NET UNREALIZED DEPRECIATION OF INVESTMENTS (1,654)
TOTAL NET ASSETS:--100.0% $51,065
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 9.51
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.52
MAXIMUM SALES CHARGE OF 2.00%+ .19
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 9.71
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.00%.
(A) Floating Rate Notes--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994.
(B) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE GOVERNMENT BOND FUND
DESCRIPTION PAR (000) VALUE (000)
U.S. TREASURY OBLIGATIONS--79.6%
U.S. Treasury Notes
5.875%, 05/15/95 $1,750 $1,752
5.125%, 11/15/95 500 495
6.125%, 07/31/96 1,000 992
6.250%, 08/31/96 2,500 2,483
6.500%, 05/15/97 1,000 991
6.500%, 08/15/97 3,000 2,967
5.750%, 10/31/97 650 628
5.625%, 01/31/98 550 527
7.875%, 04/15/98 3,000 3,073
7.125%, 10/15/98 1,000 1,001
5.125%, 11/30/98 605 561
6.375%, 01/15/99 100 97
6.750%, 05/31/99 500 490
6.875%, 07/31/99 2,000 1,968
7.125%, 09/30/99 700 695
7.875%, 08/15/01 1,000 1,023
7.500%, 11/15/01 2,000 2,003
7.500%, 05/15/02 1,000 1,000
6.375%, 08/15/02 500 466
6.250%, 02/15/03 500 459
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $23,943) 23,671
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--10.9%
FHLB
7.750%, 04/25/96 510 519
7.750%, 02/26/97 1,000 1,018
6.975%, 07/26/99 1,000 980
7.440%, 08/10/01 750 740
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS (Cost $3,309) 3,257
REPURCHASE AGREEMENTS--6.0%
J.P. Morgan 4.594%, dated 09/30/94, matures
10/03/94, repurchase price $721,133
(collateralized by a Treasury Interest
Strip Coupon, total par value $3,901,963,
matures 02/15/15, market value $735,286) 721
Merrill Lynch 4.562%, dated 09/30/94,
matures 10/03/94, repurchase price
$1,061,343 (collateralized by U.S. Treasury
Note, total par value $1,078,483, matures
01/31/95, market value $1,082,371) 1,061
TOTAL REPURCHASE AGREEMENTS
(Cost $1,782) 1,782
TOTAL INVESTMENTS--96.5% (Cost $29,034) 28,710
OTHER ASSETS AND LIABILITIES--3.5%
OTHER ASSETS AND LIABILITIES, NET 1,043
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
3,093,853 outstanding
shares $28,079
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 220,225
outstanding shares 2,077
Accumulated net
realized loss on
investments (79)
Net unrealized
depreciation of
investments (324)
TOTAL NET
ASSETS:--100.0% $29,753
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 8.98
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 8.98
MAXIMUM SALES CHARGE OF 3.00%+ .28
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 9.26
+ The offer price is calculated by dividing the net asset value per share by
1 minus the maximum sales charge of 3.00%.
FHLB--Federal Home Loan Bank
The accompanying notes are an integral part of the financial statements.
MORTGAGE SECURITIES FUND
DESCRIPTION PAR (000) VALUE (000)
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--75.8%
FHLMC
7.250%, 12/01/98 $147 $137
7.750%, 10/01/01 95 91
8.500%, 10/01/01 72 73
8.500%, 05/15/05 615 616
7.400%, 10/15/05 1,550 1,484
6.250%, 12/15/06 1,000 896
6.500%, 09/01/07 286 255
8.000%, 04/01/08 352 342
8.000%, 10/01/08 170 165
6.000%, 11/15/08 615 522
8.750%, 09/01/09 458 465
8.500%, 01/01/10 145 144
14.500%, 02/01/11 2 2
8.000%, 06/01/16 106 103
9.000%, 07/01/16 67 68
8.000%, 10/01/16 162 157
7.500%, 11/01/16 115 109
5.000%, 11/15/17 1,500 1,359
FNMA
8.000%, 08/01/96 12 12
9.148%, 06/01/97 (B) 44 44
6.000%, 10/25/98 1,636 1,605
5.750%, 11/25/98 1,239 1,200
8.000%, 05/01/08 235 229
6.000%, 06/25/08 1,300 1,077
7.000%, 11/25/10 191 181
14.750%, 03/01/12 63 72
5.900%, 07/25/15 1,500 1,370
8.250%, 07/25/15 1,662 1,694
8.500%, 01/01/17 220 221
7.500%, 04/01/18 136 129
8.500%, 08/25/18 700 715
7.000%, 10/25/19 1,500 1,378
6.750%, 11/25/19 1,000 940
5.000%, 05/25/23 1,400 1,254
GNMA
10.250%, 05/15/98 64 70
10.750%, 09/15/98 47 51
10.750%, 10/15/00 127 138
10.750%, 01/15/01 138 151
6.500%, 06/15/03 180 158
8.000%, 08/15/06 133 129
8.000%, 08/15/07 217 211
8.500%, 07/15/08 38 38
8.500%, 08/15/08 276 276
9.500%, 08/15/09 14 15
14.000%, 10/15/12 9 11
12.000%, 03/15/14 63 72
12.000%, 03/15/15 $ 28 $ 32
12.000%, 04/15/15 26 29
12.000%, 06/15/15 47 54
10.000%, 03/15/16 38 41
9.500%, 09/15/16 200 211
9.000%, 10/15/16 21 21
9.000%, 02/15/17 445 457
9.500%, 11/15/18 440 463
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE BACKED OBLIGATIONS
(Cost $22,926) 21,737
OTHER MORTGAGE BACKED OBLIGATIONS--16.6%
American Housing Trust 3 B
7.500%, 08/25/12 1,250 1,237
Bear Stearns Secured Investors
Trust 1991-2 E
7.500%, 12/20/98 1,500 1,512
Collateralized Mortgage Obligation
Trust 63 D
9.000%, 04/20/97 1,449 1,486
Morgan Stanley Mortgage Trust W 5
9.050%, 05/01/18 513 524
TOTAL OTHER MORTGAGE BACKED OBLIGATIONS (Cost
$4,807) 4,759
MASTER NOTES--6.6%
Goldman Sachs
4.950%, 10/04/94 (A) 823 823
Heller Financial
4.935%, 10/04/94 (A) 1,068 1,068
TOTAL MASTER NOTES (Cost $1,891) 1,891
TOTAL INVESTMENTS--99.0%
(Cost $29,624) 28,387
OTHER ASSETS AND LIABILITIES--1.0%
OTHER ASSETS AND LIABILITIES, NET 287
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
2,926,027 outstanding
shares $29,706
Portfolio
shares--Retail Class
A ($.0001 par
value--2 billion
authorized) based on
26,373 outstanding
shares 267
Accumulated net
realized loss on
investments (62)
Net unrealized
depreciation of
investments (1,237)
TOTAL NET
ASSETS:--100.0% $28,674
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 9.71
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.71
MAXIMUM SALES CHARGE
OF 3.75%+ .38
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 10.09
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
(B) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994.
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
FHLMC--Federal Home Loan Mortgage Corporation
The accompanying notes are an integral part of the financial statements.
LIMITED TERM TAX FREE INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--97.0%
ALASKA--2.7%
Anchorage, Telephone Utility (RB)
(AMBAC)
3.500%, 12/01/96 $250 $244
Spring Creek, Correctional Center,
Series A, Prerefunded @ 102 (COP) (CGIC)
9.500%, 10/01/95 200 214
TOTAL ALASKA 458
CALIFORNIA--14.9%
Los Angeles, Series A (GO)
4.750%, 02/01/95 250 250
San Francisco, Port Commission (RB)
4.400%, 07/01/96 500 496
San Marcos, Zero Coupon (COP)
0.000%, 03/02/95 300 295
Sonoma County (COP)
4.600%, 08/01/96 470 468
State (GO)
6.000%, 05/01/97 500 512
State, Series C (RAN)
5.750%, 04/25/96 500 506
TOTAL CALIFORNIA 2,527
GEORGIA--3.1%
Cobb County and Marietta, Water
Authority, Prerefunded @ 102 (RB)
9.000%, 11/01/95 250 267
Cobb County, School District (GO)
6.125%, 02/01/96 250 256
TOTAL GEORGIA 523
ILLINOIS--7.0%
State Development Finance Authority,
School District, Zero Coupon (GO)
(FGIC)
0.000%, 12/01/96 455 411
State Educational Facilities
Authority, Art Institute Of Chicago
(RB)
3.900%, 03/01/95 225 224
State Educational Facilities
Authority, Columbia College (RB)
4.000%, 12/01/94 155 155
State Metropolitan Pier & Exposition
Authority, Zero Coupon (RB) (AMBAC)
0.00%, 12/15/94 200 199
State Sales Tax, Series S (RB)
3.250%, 06/15/95 200 199
TOTAL ILLINOIS 1,188
INDIANA--2.9%
Indianapolis, Local Public
Improvement, Series A (RB)
4.850%, 01/10/95 $215 $ 216
New Albany, Sewer Works (RB) (AMBAC)
5.200%, 09/01/95 270 272
TOTAL INDIANA 488
KENTUCKY--1.6%
Kenton County, Hospital Facilities,
Saint Elizabeth Medical Center,
Prerefunded @ 102 (RB) (AMBAC)
9.300%, 11/01/95 250 268
LOUISIANA--2.3%
State Deepwater Port Authority,
Series B (RB)
4.600%, 09/01/95 200 200
State Public Facilities Authority,
St. Francis Medical Center Project
(RB) (FSA)
3.550%, 07/01/96 200 197
TOTAL LOUISIANA 397
MAINE--2.9%
State Highway Authority (RB)
6.000%, 04/15/96 480 491
MASSACHUSETTS--4.1%
State Housing Finance Agency, Insured
Rental Housing, Series A (RB) (AMBAC)
(AMT)
4.900%, 01/01/97 250 248
State Port Authority, Series A (RB)
3.600%, 07/01/95 250 249
State Water Resource Authority (RB)
4.125%, 10/15/95 200 200
TOTAL MASSACHUSETTS 697
MINNESOTA--10.5%
Fridley, Commercial Developement,
Mandatory Put @ 100 (RB) (NBOC)
4.900%, 09/01/96 235 234
Minneapolis, Special School District
#001 (COP)
4.750%, 06/01/96 300 299
Minnetonka, Multifamily Housing,
Southampton Apartments Project,
Mandatory Put @ 100 (RB) (NBOC)
4.750%, 06/01/95 500 500
Southern Municipal Power Agency, Series
B (RB)
4.500%, 01/01/96 $500 $ 498
Western Municipal Power Agency, Series
A, Prerefunded @ 102 (RB)
9.500%, 01/01/96 225 243
TOTAL MINNESOTA 1,774
NEBRASKA--3.5%
Omaha, Public Power District, Series B (RB)
3.400%, 02/01/95 300 299
Omaha, Public Power District,
Series D (RB)
3.300%, 02/01/95 300 299
TOTAL NEBRASKA 598
NEVADA--1.9%
Las Vegas Valley, Water Distribution
(RB) (AMBAC)
9.500%, 08/01/95 300 314
NEW MEXICO--1.8%
Albuquerque Airport, Gross Receipts Tax
(RB)
8.250%, 07/01/95 300 309
NEW YORK--1.6%
State Medical Care Facilities, Series
A, Prerefunded @ 102 (RB) (AMBAC)
8.500%, 01/15/96 250 268
NORTH DAKOTA--1.9%
Cass County, Hospital Facility,
Mandatory Sinking Fund (RB)
8.500%, 09/01/97 300 314
OHIO--1.2%
State Building Authority (RB)
3.250%, 04/01/95 200 199
RHODE ISLAND--5.9%
Pawtucket (GO) (FGIC)
7.750%, 04/15/97 750 796
State (GO)
6.900%, 06/15/95 200 204
TOTAL RHODE ISLAND 1,000
SOUTH CAROLINA--1.6%
Florence County, Mcleod Regional
Medical Center Project, Series B,
Prerefunded @ 102 (RB) (FGIC)
8.300%, 11/01/95 250 265
TENNESSEE--1.6%
State Local Developement Authority, Community
Provider Loan Program (RB)
4.600%, 10/01/96 $275 $ 273
TEXAS--10.8%
Dallas, Waterworks & Sewer (RB)
8.200%, 04/01/97 500 538
Panhandle Plains, Higher Education
Authority, Mandatory Put
@ 100 (RB) (SLMA)
3.650%, 03/02/95 300 300
San Antonio (GO)
8.000%, 08/01/95 250 258
State (GO)
6.700%, 12/01/96 320 336
State, Prerefunded @ 100 (GO)
8.000%, 10/01/95 200 207
Texas Tech University (RB)
3.350%, 02/15/95 200 199
TOTAL TEXAS 1,838
UTAH--1.9%
State Intermountain Power Agency, 1985
Series A, Prerefunded @ 102.50 (RB)
9.250%, 07/01/95 300 319
VIRGINIA--2.6%
Fairfax County, Water Authority (RB)
3.350%, 04/01/96 250 245
Virginia Beach (GO)
3.350%, 07/15/95 200 199
TOTAL VIRGINIA 444
WASHINGTON--6.4%
Seattle, Municipal Power & Light (RB)
3.450%, 05/01/95 300 298
South Columbia Basin (RB)
4.800%, 12/01/95 200 201
State Public Power Supply, Nuclear
Project #3, Series C (RB)
3.500%, 07/01/95 300 298
State, Series R-94A (GO)
3.400%, 08/01/95 300 297
TOTAL WASHINGTON 1,094
WISCONSIN--2.3%
Kenosha, Public And Miscellaneous Improvements,
Series A, Promissory
Notes, (GO) (AMBAC)
3.800%, 04/01/95 200 200
Milwaukee (GO)
3.750%, 06/15/95 $200 $ 199
TOTAL WISCONSIN 399
TOTAL MUNICIPAL BONDS (Cost $16,525) 16,445
CASH EQUIVALENTS--1.1%
Federated Minnesota Municipal
Cash Trust (A)
3.304%, 10/07/94 55 55
Federated Tax Free Money Market (A)
3.294%, 10/07/94 125 125
TOTAL CASH EQUIVALENTS (Cost $180) 180
TOTAL INVESTMENTS--98.1%
(Cost $16,705) 16,625
OTHER ASSETS AND LIABILITIES--1.9%
OTHER ASSETS AND LIABILITIES, NET 323
NET ASSETS
Portfolio shares--Institutional Class (no par
value--unlimited authorization) based on
1,643,218 outstanding shares 16,441
Portfolio shares--Retail Class a (no par
value--unlimited authorization) based on 60,241
outstanding shares 602
ACCUMULATED NET REALIZED LOSS ON INVESTMENTS (15)
NET UNREALIZED DEPRECIATION OF INVESTMENTS (80)
TOTAL NET ASSETS:--100.0% $16,948
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.95
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.95
MAXIMUM SALES CHARGE OF 2.00%+ .20
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.15
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.00%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
GO--General Obligation
RB--Revenue Bond
COP--Certificates of Participation
RAN--Revenue Anticipation Notes
AMT--Alternative Minimum Tax
AMBAC--American Municipal Bond Assurance Company
SLMA--Student Loan Marketing Association
NBOC--National Bank of Canada
FGIC--Financial Guaranty Insurance Corporation
FSA--Financial Security Assurance
CGIC--Capital Guaranty Insurance Company
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TAX FREE FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--93.4%
ALABAMA--1.3%
Jefferson County, Sewer System
(RB) (MBIA)
5.000%, 09/01/01 $100 $ 98
CALIFORNIA--11.0%
Contra Costa, Water Authority, Callable 10/01/04
@ 102 (RB) (MBIA)
5.800%, 10/01/07 200 196
Orange County, Transportation
Authority, Callable 02/15/02
@ 102 (RB)
5.700%, 02/15/03 200 202
San Diego, Callable 01/01/04
@ 101 (RB)
5.625%, 01/01/06 200 198
State Health Facilities Authority,
Callable 10/01/98 @ 102 (RB) (CMI)
7.250%, 10/01/99 200 209
TOTAL CALIFORNIA 805
COLORADO--1.9%
Aurora, Single Family Mortgage,
Series 1993-A (RB)
3.875%, 05/01/00 60 59
Colorado Springs, Utilities, Series A,
Prerefunded @ 100 (RB)
8.000%, 05/15/97 20 22
Denver, City & County Refunding,
Callable 09/01/01 @ 100 (RB)
5.100%, 09/01/05 60 57
TOTAL COLORADO 138
FLORIDA--0.4%
Dade County, Senior High School
Facilities, Series A, Callable 07/01/95
@ 102 (COP) (LOC: Sumitomo Bank)
6.900%, 07/01/97 15 15
North Brevard County, Health, Hospital,
And Nursing Home Improvements, Jess
Parish Memorial Hospital (RB) (AMBAC)
6.800%, 09/01/96 15 16
TOTAL FLORIDA 31
GEORGIA--0.2%
State Municipal Electric Power
Authority, Series P (RB)
7.200%, 01/01/98 15 16
IDAHO--1.5%
State Health Facilities Authority, Saint
Joseph Medical Center (RB) (MBIA)
4.950%, 07/01/06 $100 $ 93
State Housing Agency, Single Family
Mortgage (RB)
5.900%, 07/01/99 15 15
TOTAL IDAHO 108
ILLINOIS--6.0%
Central Lake County, Joint Action Water
Agency (RB) (FGIC)
5.100%, 05/01/03 100 95
Chicago, Public Improvements, Series A
(GO) (AMBAC)
4.700%, 01/01/98 25 25
Lake County, Water & Sewer System,
Series A, Prerefunded @ 100 (RB) (AMBAC)
6.800%, 12/01/01 25 27
Lansing, Sales Tax, Callable @ 102
12/01/02 (RB) (AMBAC)
5.350%, 12/01/04 200 196
Rockford, Park District, Series B,
Callable 01/01/99 @ 100 (GO)
4.400%, 01/01/00 75 70
Springfield, Miscellaneous Improvements
(GO)
6.550%, 12/01/98 25 26
TOTAL ILLINOIS 439
INDIANA--2.6%
Perry Township, Multi-school Building,
Escrowed To Maturity (RB) (STAID)
7.000%, 07/01/97 15 16
Tippecanoe County, Lafayette Building
Authority (RB)
4.750%, 01/01/00 100 97
Transportation Authority,
Series A (RB)
5.400%, 12/01/97 75 76
TOTAL INDIANA 189
IOWA--1.9%
Davenport, Home Ownership Mortgage,
Series 1994 (RB)
4.000%, 03/01/03 140 138
MICHIGAN--2.6%
Dearborn, School District Callable
05/01/03 @ 101.5 (GO) (MBIA)
4.850%, 05/01/05 $100 $ 91
St. Joseph, Hospital Finance Authority,
Mercy Memorial Medical Center (RB)
(AMBAC)
4.750%, 01/01/02 100 95
TOTAL MICHIGAN 186
MINNESOTA--8.5%
Minneapolis & St Paul, Housing &
Redevelopment Authority, Callable
11/15/03 @ 102 (RB) (AMBAC)
4.750%, 11/15/18 100 79
Robbinsdale, North Memorial
Medical Center, Series B Callable
05/15/03 @ 102 (RB) (AMBAC)
5.450%, 05/15/13 150 136
Saint Louis Park, Health Care
Facilities, Series A (RB) (AMBAC)
4.300%, 07/01/00 100 95
Southern Minnesota, Municipal
Power Authority, Callable 01/01/03
@ 102 (RB)
5.600%, 01/01/04 200 196
State Higher Education Facilities
Authority, Saint Catherines College,
Series 3-M2 (RB) (CL)
4.800%, 10/01/98 25 25
Wayzata, School District, Series B,
Callable 02/01/03 @ 100 (GO) (FGIC)
4.900%, 02/01/07 100 90
TOTAL MINNESOTA 621
MISSOURI--4.8%
Kansas City, Metropolitan Community
Colleges Building, Series B (RB) (FGIC)
4.050%, 07/01/98 40 39
Kansas City, School District (RB) (FGIC)
6.300%, 02/01/00 300 314
TOTAL MISSOURI 353
MONTANA--1.3%
State Health Facility Authority, Holy
Rosary Hospital Project, Series 1993
(RB) (MBIA)
4.400%, 07/01/01 100 95
NEBRASKA--0.3%
State Public Power District, Series A, Callable
01/01/03 @ 102 (RB)
5.200%, 01/01/07 $ 25 $ 23
NORTH DAKOTA--11.2%
Bismarck, Hospital Authority (RB) (AMBAC)
6.250%, 05/01/99 200 208
Fargo, Water Authority Callable
1-12/01/04 @ 100 (RB) (MBIA)
5.000%, 01/01/05 300 274
State Building Authority (RB) (AMBAC)
6.900%, 06/01/97 300 314
State Municipal Bond Bank, Capital
Financing Program, Series E (RB)
6.400%, 12/01/95 20 21
TOTAL NORTH DAKOTA 817
OKLAHOMA--2.9%
Oklahoma County, Home Finance
Authority Zero Coupon (RB), Escrowed
To Mandatory Put Date @ 56.915
0.000%, 03/01/06 790 214
OREGON--9.1%
Deschutes & Jefferson Counties, School
District (GO) (MBIA)
5.000%, 06/01/02 200 194
Multnomah County, School District (GO)
5.100%, 06/01/03 200 194
State (GO)
7.000%, 07/01/01 250 272
TOTAL OREGON 660
PENNSYLVANIA--3.9%
Commonwealth, Callable 05/01/04 @ 101.5
(GO)
5.300%, 05/01/06 300 284
SOUTH CAROLINA--1.4%
Beaufort County, (GO) (MBIA)
5.200%, 12/01/98 100 101
SOUTH DAKOTA--0.7%
State Building Authority, Series B
Callable 09/01/01 @ 100 (RB)
6.600%, 09/01/04 25 26
State Health And Education, Rapid City
Regional Hospital (RB) (MBIA)
5.300%, 09/01/00 25 25
TOTAL SOUTH DAKOTA 51
TEXAS--1.6%
Addison, Water & Sewer System (RB)
(AMBAC)
4.400%, 05/01/99 $100 $ 98
San Antonio, Electric And Gas
Improvement (RB)
6.900%, 02/01/96 15 15
TOTAL TEXAS 113
VIRGINIA--4.0%
Virginia Beach, Callable 11/01/04
@ 102 (GO) (STAID) *Non-income producing security
5.500%, 11/01/05 300 293
WASHINGTON--3.1%
Pierce County, School District #10
Callable 06/01/96 @ 100 (GO)
6.700%, 06/01/97 15 15
Seattle, (GO)
4.200%, 12/01/99 25 23
Snohomish County, School District
#15 EDMONDS (GO) (MBIA)
5.100%, 12/01/02 100 97
State Health Care Facilities, Dominican
Health Services (RB) (CL)
5.200%, 06/01/01 75 74
State Health Care Facilities, Tacoma
Multi-care Medical Center (RB) (FGIC)
7.150%, 08/15/98 15 16
TOTAL WASHINGTON 225
WASHINGTON, D.C.--2.9%
DISTRICT OF COLUMBIA, CALLABLE 6/01/98 @
101.5 (GO) (MBIA)
6.750%, 06/01/01 200 209
WEST VIRGINIA--0.2%
State Hospital Finance Authority, West
Virginia University Medical Center,
Callable 01/01/98 @ 102 (RB) (MBIA)
7.400%, 01/01/99 15 16
WISCONSIN--7.5%
Kenosha, Promissory Notes, Series A (GO)
(AMBAC)
4.900%, 04/01/99 75 74
Oak Creek, Water Works System, Callable
12/95 @ 100 (RB)
5.600%, 12/01/96 25 25
State Health & Education Authority,
Marquette University Project Callable
12/01/01 @ 100 (RB) (MBIA)
5.400%, 12/01/03 $ 60 $ 58
State Health And Educational Facilities,
Childrens Hospital, Series B (RB) (FGIC)
6.500%, 08/15/95 15 15
State, Prerefunded @ 100 (GO)
6.900%, 05/01/98 300 318
Wausau, Sewer System (RB)
5.300%, 01/01/02 60 59
TOTAL WISCONSIN 549
WYOMING--0.6%
State Community Development Authority,
Single Family Mortgage, Series A (RB)
(FHA)
6.400%, 06/01/95 15 15
Sweetwater, Pollution Control,
Pacific Power & Light Project,
Prerefunded 12/01/01 @ 100 (RB)
6.500%, 12/01/01 25 27
TOTAL WYOMING 42
TOTAL MUNICIPAL BONDS (Cost $6,912) 6,814
CASH EQUIVALENTS--4.7%
Federated Minnesota Municipal Cash Trust
3.304%, 10/07/94 68 68
Federated Tax Free Money Market
3.294%, 10/07/94 273 273
TOTAL CASH EQUIVALENTS (Cost $341) 341
TOTAL INVESTMENTS--98.1%
(Cost $7,253) 7,155
OTHER ASSETS AND LIABILITIES--1.9%
OTHER ASSETS AND LIABILITIES, NET 141
NET ASSETS
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
599,982 outstanding shares $6,269
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 109,654
outstanding shares 1,166
Accumulated net realized loss on investments (41)
Net unrealized depreciation of
investments (98)
TOTAL NET ASSETS:--100.0% $7,296
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $10.28
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS A $10.28
MAXIMUM SALES CHARGE OF 3.00%+ .32
OFFERING PRICE PER SHARE--RETAIL CLASS A $10.60
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.00%
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
GO--General Obligation
RB--Revenue Bond
AMBAC--American Municiapl Bond Assurance Company
CL--Connie Lee
CMI--California Municipal Insurers
FGIC--Financial Guaranty Insurance Corporation
FHA--Federal Housing Authority
MBIA--Municipal Bond Insurance Association
STAID--State Aid Withholding
COP--Certificates of Participation
LOC--Letter of Credit
The accompanying notes are an integral part of the financial statements.
COLORADO INTERMEDIATE TAX FREE FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--98.9%
COLORADO--98.9%
Adams County, School District
(GO) (FGIC)
6.000%, 12/01/00 $250 $261
Arapahoe County (COP) (AMBAC)
5.650%, 12/01/98 125 128
Arapahoe County, Cherry Creek School
District #5, Callable 12/15/95 @ 102 (GO)
5.600%, 12/15/97 350 357
Auraria, Higher Education Center,
Callable 04/01/03 @ 101 (RB) (FSA)
5.000%, 04/01/05 200 186
Aurora, Callable 12/01/04 @ 101 (COP)
6.000%, 12/01/06 350 343
Aurora, Single Family Mortgage,
Series 1993A, Callable 11/01/94 @ 100
(RB)
3.875%, 05/01/00 15 15
Boulder Valley, School District
#Re 2, Series A (GO)
5.500%, 10/15/99 75 76
Boulder, Callable 10/01/01 @ 101 (GO)
5.700%, 10/01/04 250 249
Boulder, Larimer, & Weld Counties,
Vrain Valley School District,
Prerefunded @ 101 (GO)
7.200%, 12/15/99 400 436
Boulder, Urban Renwal Tax Allocation
(RB) (MBIA)
5.700%, 03/01/00 150 153
Breckenridge, Excise Tax (RB) (MBIA)
5.100%, 12/01/00 400 397
Broomfield, Callable 11/01/96 @ 101 (GO)
7.600%, 11/01/03 350 371
Centennial Water & Sanitation, Series A,
Callable 12/01/96 @ 101 (GO) (SWB)
4.750%, 12/01/97 200 198
Colorado Springs, Colorado College
Project (RB)
4.100%, 06/01/99 30 29
Colorado Springs, Series A, Callable
11/15/01 @ 102 (RB)
6.625%, 11/15/04 40 43
Denver, City & County Airport, Series F
(RB) (BOM) (AMT) (A)
3.850%, 11/15/25 300 300
Denver, City & County School
District #1 (GO)
5.600%, 06/01/08 350 329
Denver, Major League Baseball Stadium
District, Revenue Refunding & Import
Sales Tax, Series A (RB) (FGIC)
5.800%, 10/01/98 $ 50 $ 52
Eagle, Garfield, & Routt Counties,
School District #50J Callable
12/01/04 @ 102 (GO) (FGIC)
6.125%, 12/01/09 (B) 390 389
El Paso County, School District #020 (GO)
6.100%, 12/01/99 150 152
Fort Collins, Callable 12/01/02 @ 101 (GO)
5.550%, 12/01/03 75 75
Fort Collins, Downtown Development
Authority (RB) (MBIA)
6.200%, 06/01/01 75 78
Fort Collins, Sales & Use Tax (RB) (FGIC)
4.900%, 06/01/01 100 98
Jefferson County, Callable 12/15/02
@ 101 (GO) (AMBAC)
5.900%, 12/15/04 350 357
Jefferson County, Industrial
Development (RB)
6.625%, 09/01/01 65 68
Jefferson County, Metropolitain Y.M.C.A.,
Callable 08/01/04 @ 100 (RB)
7.500%, 08/01/08 200 197
La Plata County, School Districts
#9 and Durango, Callable 11/01/02
@ 101 (GO) (FGIC)
6.200%, 11/01/05 400 412
Larimer County (GO)
5.400%, 12/15/04 125 121
Larimer, Weld, & Boulder Counties,
School District #R-2J Thompson,
Callable 12/15/04 @ 100 (GO)
5.900%, 12/15/06 350 347
Longmont (GO)
5.250%, 11/15/01 75 75
Platte River Power Authority, Series BB (RB)
5.500%, 06/01/02 150 150
Poudre Valley, Hospital District (RB)
4.600%, 11/15/99 50 48
Pueblo, Urban Renewal Authority,
Callable 12/01/03 @ 101 (RB)
5.800%, 12/01/09 150 146
State Board of Agriculture, Fort
Lewis College (RB) (FGIC)
6.000%, 10/01/02 200 207
State Colleges Board, Mesa State College,
Series B Enterprise, Callable 05/15/04
@ 101 (RB) (MBIA)
5.500%, 05/15/09 $200 $ 187
State Housing Finance Authority (RB)
5.000%, 06/01/04 100 94
State Housing Finance Authority,
Multifamily Housing, Series A (RB) (FHA)
5.125%, 10/01/03 100 95
State Housing Finance Authority,
Single Family Mortgage, Series C-2
(RB) (FHA) (AMT)
6.850%, 08/01/22 90 90
State Regional Transit District,
Sales Tax (RB) (FGIC)
4.875%, 11/01/01 75 73
State Student Loan Obligation
Authority, Series A (RB)
6.250%, 06/01/96 125 129
State Water Resource & Power
Development Authority, Callable
09/01/02 @ 101 (RB) (FSA)
5.900%, 09/01/03 75 77
State Water Resources & Power
Development Authority, Clean Water,
Callable 09/01/02 @ 102 (RB)
5.800%, 09/01/06 150 150
Thornton, Callable 12/01/02
@ 101 (GO) (FGIC)
5.650%, 12/01/03 150 151
TOTAL COLORADO 7,889
TOTAL MUNICIPAL BONDS
(Cost $7,921) 7,889
CASH EQUIVALENTS--3.2%
Federated Tax Free Money Market (A)
3.294%, 10/07/94 $252 $ 252
TOTAL CASH EQUIVALENTS (Cost $252) 252
TOTAL INVESTMENTS--102.1%
(Cost $8,173) $8,141
(A) Variable Rate with Demand Features--the rate reported in the Schedule of
Investments is the rate in effect as of September 30, 1994
(B) When issued security (Cost $389,009)
AMT--Alternative Minimum Tax
COP--Certificates of Participation
GO--General Obligation
RB--Revenue Bond
AMBAC--American Municipal Bond Assurance Company
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Authority
FSA--Financial Security Assurance
SWB--Swiss Bank
MBIA--Municipal Bond Insurance Company
BOM--Bank of Montreal
The accompanying notes are an integral part of the financial statements.
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--95.3%
MINNESOTA--95.3%
Anoka County Solid Waste Disposal
(RB) (CFC) (AMT)
6.000%, 12/01/98 $500 $507
Anoka-Hennepin, Callable 02/01/03 @
100 (GO) (FGIC)
4.875%, 02/01/07 500 448
Becker, Tax Increment, Series D,
Callable 08/01/04 @ 100 (GO) (MBIA)
6.000%, 08/01/07 500 493
Bloomington, Mall of America
Project, Series A, Callable 02/01/04
@ 100 (RB) (FSA)
5.450%, 02/01/09 800 778
Burnsville Apartment Projects, Series A,
Putable 12/01/98 (RB) (PMLIC)
5.000%, 12/01/08 500 496
Coon Rapids, Single Family Mortgage,
Callable 09/01/04 @ 102 (RB)
5.900%, 09/01/06 500 492
Dakota County, Housing & Redevelopment
Authority, Single Family Mortgage, Callable
09/01/98 @ 103 (RB) (GNMA, FHA/VA
Credit Support)
7.250%, 03/01/06 900 900
Dakota County, Single Family
Mortgage, Series 1994A, Callable
04/01/04 @ 102 (RB) (FNMA) (AMT)
6.250%, 10/01/04 500 500
Dakota, Washington & Stearns
Counties, Single Family Mortgage,
Callable 03/01/04 @ 102 (RB)
(FNMA) (AMT)
6.000%, 09/01/04 650 645
Duluth, Economic Development
Authority, Health Care Facilities,
Callable 11/01/02 @ 102
(RB) (AMBAC)
6.100%, 11/01/04 500 512
Mahtomedi, Independent School
District (GO) (FGIC)
4.250%, 02/01/02 100 92
Mankato, Independent School
District, Series A, Callable
02/01/04 @ 100 (GO) (CGIC)
5.000%, 02/01/05 800 749
Minneapolis & St. Paul, Housing
Finance Board, Single Family
Mortgage, Series A (RB) (AMT)
(GNMA, FHA/VA Credit Support)
7.875%, 12/01/12 $ 50 $ 50
Minneapolis & St.Paul Metropolitan
Airports, Callable 01/01/99 @ 102
(RB) (AMT)
7.800%, 01/01/11 500 543
Minneapolis, Community Development
Agency, (RB) (MBIA)
7.000%, 03/01/01 800 871
Minneapolis, Convention Center,
Prerefunded @ 102, (RB) (AMBAC)
7.400%, 04/01/96 250 265
Minneapolis, Health Care Facilities,
Callable 11/15/02 @ 102 (RB) (MBIA)
5.100%, 11/15/05 700 655
Minneapolis, Hennepin Avenue,
Series C (GO)
6.200%, 03/01/02 750 788
Northern Municipal Power Agency,
Minnesota Electric, Series A, Callable
01/01/03 @ 102 (RB) (AMBAC)
5.700%, 01/01/05 800 801
Plymouth Health Facilities,
Callable 06/01/04 @ 102 (RB) (CGIC)
6.200%, 06/01/11 800 798
Robbinsdale, North Memorial
Medical Center Project, Escrowed
To Maturity, (RB) (AMBAC)
6.750%, 01/01/97 400 418
Rochester, St. Mary's Hospital
Project, Escrowed To Maturity (RB)
5.750%, 10/01/07 500 489
Rosemount, Independent School
District, Series B, (GO) (FGIC)
5.600%, 02/01/98 500 509
Saint Louis Park, Health Care
Facilities, Series A (RB) (AMBAC)
4.300%, 07/01/00 100 95
Saint Louis Park, Methodist
Hospital Facilities, Series C,
Pre-Refunded @ 102 (RB) (AMBAC)
7.150%, 07/01/00 500 555
St. Paul Sewer Systems, Callable
06/01/03 @ 100 (RB) (AMBAC)
5.350%, 12/01/04 800 785
St. Paul, Housing & Development
Authority, Downtown & Seventh Place
Project (RB) (AMBAC)
4.850%, 09/01/01 500 486
St. Paul, Housing & Redevelopment
Authority, Civic Center Project (RB)
4.550%, 11/01/00 $100 $ 94
State Housing Finance Agency, Single
Family Mortgage, Series D, Callable
01/01/04 @ 102 (RB) (AMBAC)
4.800%, 07/01/04 800 757
State Tax-Exempt Mortgage
Trust, Series A (Guarantor:
Northwestern National) (RB) (A)
4.096%, 02/01/96 251 251
State Tax-Exempt Mortgage
Trust, Series C (Guarantor:
Northwestern National) (RB) (A)
5.306%, 01/15/95 993 984
Stearns County, Housing &
Redevelopment Authority, Callable
02/01/99 @ 102, (RB) (AMBAC)
6.750%, 02/01/04 1,000 1,054
Stillwater, Independent School
District, Callable 02/01/02 @ 100
(RB) (FGIC)
5.200%, 02/01/03 800 777
Washington County, Housing
& Redevelopment Authority,
Pre-Refunded 02/01/02 @ 100, (RB)
6.800%, 02/01/02 800 867
Wayzata Independent School District,
Series B, Callable 02/01/03 @ 100
(GO) (FGIC)
4.900%, 02/01/07 800 722
Wright County Solid Waste, Series C,
Callable 12/01/99
@ 100 (RB) (AMT) (CGIC)
7.000%, 12/01/05 500 543
TOTAL MINNESOTA 20,769
TOTAL MUNICIPAL BONDS
(Cost $21,021) 20,769
CASH EQUIVALENTS--3.5%
Federated Minnesota Municipal Cash
Trust (A)
3.304%, 10/07/94 482 482
Federated Tax Free Money Market (A)
3.294%, 10/07/94 276 276
TOTAL CASH EQUIVALENTS (Cost $758) 758
TOTAL INVESTMENTS--98.8%
(Cost $21,779) 21,527
OTHER ASSETS AND LIABILITIES--1.2%
OTHER ASSETS AND LIABILITIES, NET 253
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 2,114,099 outstanding shares $20,524
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
157,379 outstanding shares 1,520
Accumulated net realized loss on
investments (12)
Net unrealized depreciation
of investments (252)
TOTAL NET ASSETS:--100.0% $21,780
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 9.59
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.58
MAXIMUM SALES CHARGE OF 3.00%+ .30
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 9.88
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.00%.
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994. The date shown is the longer
of the reset or demand date.
AMT--Alternative Minimum Tax
GO--General Obligation
RB--Revenue Bond
AMBAC--American Municipal Bond Assurance Company
CFC--National Rural Utilities Cooperative Finance Corporation
CGIC--Capital Guaranty Insurance Company
FGIC--Financial Guaranty Insurance Company
FHA/VA--Federal Housing Authority/Veterans Administration
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Insurance Company
PMLIC--Phoenix Mutual Life Insurance Company
The accompanying notes are an integral part of the financial statements.
ASSET ALLOCATION FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--60.3%
AEROSPACE & DEFENSE--0.5%
Lockheed 600 $ 42
Loral 700 28
Martin Marietta 800 36
Raytheon 1,300 82
Rockwell International 2,100 72
TOTAL AEROSPACE & DEFENSE 260
AGRICULTURE--0.1%
Pioneer Hi-Bred International 900 28
AIR TRANSPORTATION--0.2%
AMR* 600 31
Delta Air Lines 300 13
Federal Express* 600 37
TOTAL AIR TRANSPORTATION 81
AIRCRAFT--0.9%
AlliedSignal 2,700 92
Boeing 2,800 121
General Dynamics 600 26
McDonnell Douglas 400 46
Northrop 700 32
Textron 700 36
United Technologies 1,100 69
TOTAL AIRCRAFT 422
APPAREL/TEXTILES--0.1%
Liz Claiborne 700 16
V.F. 600 30
TOTAL APPAREL/TEXTILES 46
AUTOMOTIVE--1.7%
Chrysler 2,900 130
Dana 1,000 28
Eaton 900 43
Ford Motor 8,300 230
General Motors 6,800 319
Paccar 390 18
TRW 500 36
TOTAL AUTOMOTIVE 804
BANKS--3.6%
Banc One 3,552 106
Bank Of Boston 900 24
BankAmerica 3,100 134
Bankers Trust New York 700 47
Barnett Banks 1,100 49
Boatmens Bancshares 900 28
Chase Manhattan 1,800 $ 62
Chemical Banking 2,100 74
Citicorp 3,200 135
Corestates Financial 1,300 35
First Chicago 900 41
First Fidelity Bancorp 800 34
First Interstate Bancorp 700 57
First Union 1,700 74
Fleet Financial Group 1,100 41
Golden West Financial 500 20
Great Western Financial 1,100 21
H.F. Ahmanson 1,000 21
J.P. Morgan 1,600 97
Keycorp 2,400 73
MBNA 1,400 32
Mellon Bank 600 34
NationsBank 2,200 108
NBD Bancorp 1,700 49
Norwest 2,600 64
PNC Bank 2,300 60
Shawmut National 900 19
Suntrust Banks 1,200 59
U.S. Bancorp 900 23
Wachovia 1,600 52
Wells Fargo 500 73
TOTAL BANKS 1,746
BEAUTY PRODUCTS--1.1%
Avon Products 800 48
Colgate-Palmolive 1,200 70
Ecolab 1,200 26
International Flavors &
Fragrances 1,200 50
Procter & Gamble 5,700 339
TOTAL BEAUTY PRODUCTS 533
BROADCASTING, NEWSPAPERS & ADVERTISING--0.7%
Capital Cities ABC 1,500 123
CBS 145 47
Comcast, Class A 2,400 37
Interpublic Group 800 26
Tele-Communications, Class A* 4,600 102
TOTAL BROADCASTING, NEWSPAPERS
& ADVERTISING 335
BUILDING & CONSTRUCTION--0.2%
Fluor 700 35
Halliburton 1,200 38
TOTAL BUILDING & CONSTRUCTION 73
CHEMICALS--2.5%
Air Products & Chemical 1,200 $ 56
American Cyanamid 1,000 100
Dow Chemical 2,300 180
E.I. Dupont De Nemours 5,600 325
Eastman Chemical 800 44
FMC* 300 19
Great Lakes Chemical 800 47
Hercules 400 41
Monsanto 1,000 80
Morton International 1,200 33
Nalco Chemical 600 20
PPG Industries 2,000 79
Praxair 1,200 29
Rohm & Haas 700 40
Union Carbide 1,500 51
W.R. Grace 900 37
TOTAL CHEMICALS 1,181
COMMUNICATIONS EQUIPMENT--0.8%
DSC Communications* 900 26
Harris 600 29
Motorola 4,600 243
Northern Telecom 2,400 83
TOTAL COMMUNICATIONS EQUIPMENT 381
COMPUTERS & SERVICES--1.6%
Apple Computer 1,100 37
Compaq Computer* 2,100 69
Digital Equipment* 1,400 37
Hewlett Packard 2,100 183
IBM 4,800 334
Pitney Bowes 1,300 46
Tandy 600 26
Unisys* 2,400 26
TOTAL COMPUTERS & SERVICES 758
CONTAINERS & PACKAGING--0.2%
Crown Cork & Seal* 1,000 39
Newell 1,800 40
TOTAL CONTAINERS & PACKAGING 79
DOLLS AND STUFFED TOYS--0.1%
Mattel 1,500 41
DRUGS--4.1%
Abbott Laboratories 6,800 213
Alza, Class A* 1,200 25
American Home Products 2,600 156
Amgen* 1,100 59
Bristol-Myers Squibb 4,200 241
Eli Lilly 2,400 $ 139
Johnson & Johnson 5,300 274
Mallinckrodt Group 700 23
Merck 10,400 368
Pfizer 2,700 187
Schering Plough 1,600 114
Upjohn 1,800 61
Warner Lambert 1,100 88
TOTAL DRUGS 1,948
ELECTRICAL SERVICES--2.6%
American Electric Power 1,700 53
Baltimore Gas & Electric 1,600 37
Carolina Power & Light 1,800 47
Central & South West 2,200 49
Consolidated Edison New York 2,300 57
Detroit Edison 1,700 43
Dominion Resources Of Virginia 1,700 63
Duke Power 1,700 66
Entergy 2,100 49
FPL Group 1,800 59
Houston Industries 1,100 39
Niagara Mohawk Power 1,400 19
Northern States Power 700 30
Ohio Edison 1,700 32
Pacific Gas & Electric 4,100 93
Pacificorp 2,400 41
Peco Energy 2,200 56
Public Service Enterprise Group 2,400 63
SCEcorp 4,600 60
Southern 6,100 113
Texas Utilities 2,000 65
Unicom 2,500 56
Union Electric 1,200 42
TOTAL ELECTRICAL SERVICES 1,232
ENTERTAINMENT--0.6%
Blockbuster Entertainment 2,500 72
Promus* 1,150 39
Walt Disney 4,500 174
TOTAL ENTERTAINMENT 285
ENVIRONMENTAL SERVICES--0.4%
Browning Ferris Industries 2,000 64
WMX Technologies 4,000 115
TOTAL ENVIRONMENTAL SERVICES 179
FINANCIAL SERVICES--1.3%
American Express 4,100 125
Beneficial 400 16
Dean Witter Discover 1,446 54
Federal Home Loan Mortgage 1,700 $ 91
Federal National Mortgage
Association 2,300 181
H & R Block 900 41
Household International 900 32
Merrill Lynch 1,700 59
Transamerica 728 37
TOTAL FINANCIAL SERVICES 636
FOOD, BEVERAGE & TOBACCO--5.3%
American Brands 1,700 62
Anheuser Busch 2,200 112
Archer Daniels Midland 3,291 86
Brown Forman, Class B 600 16
Campbell Soup 2,100 83
Coca Cola 10,700 518
ConAgra 2,300 72
CPC International 1,500 76
General Mills 1,300 75
Heinz (H.J.) 2,100 77
Hershey Foods 800 36
Kellogg 1,900 109
Pepsico 6,600 219
Pet 900 18
Philip Morris 7,300 446
Quaker Oats 700 54
Ralston Purina Group 1,000 41
Sara Lee 4,000 90
Seagram 3,100 94
Unilever N.V.-ADR 1,400 159
UST 1,700 49
Wrigley (WM) Jr 1,300 53
TOTAL FOOD, BEVERAGE & TOBACCO 2,545
GAMES, TOYS AND CHILDREN'S VEHICLES--0.1%
Hasbro 900 27
GAS/NATURAL GAS--0.5%
Coastal 1,200 33
Consolidated Natural Gas 1,100 43
Enron 2,500 75
Pacific Enterprises 1,200 26
Panhandle Eastern 1,100 26
Sonat 1,000 31
Williams Companies 1,000 30
TOTAL GAS/NATURAL GAS 264
GLASS PRODUCTS--0.1%
Corning 2,000 65
HOTELS & LODGING--0.1%
Hilton Hotels 500 30
HOUSEHOLD FURNITURE & FIXTURES--0.1%
Masco 1,300 $ 31
HOUSEHOLD PRODUCTS--0.6%
Clorox 600 31
Gillette 1,800 128
Maytag 1,000 16
National Service Industries 200 5
Sherwin Williams 800 25
Snap-On Tools 300 11
Stanley Works 400 16
Whirlpool 800 41
TOTAL HOUSEHOLD PRODUCTS 273
INSURANCE--2.2%
Aetna Life & Casualty 900 42
American General 2,100 57
American International Group 2,650 235
Chubb 900 64
Cigna 800 49
General Re 700 74
Jefferson-Pilot 400 21
Lincoln National 1,000 37
Marsh & Mclennan 600 47
Providian 1,000 32
Safeco 600 31
St. Paul Companies 1,000 41
Torchmark 600 26
Travelers 3,035 100
U.S. Healthcare 1,600 75
United Healthcare 1,600 85
UNUM 700 32
TOTAL INSURANCE 1,048
LUMBER & WOOD PRODUCTS--0.1%
Louisiana Pacific 1,200 40
MACHINERY--2.8%
Baker Hughes 1,500 28
Black & Decker 700 15
Brunswick 1,400 28
Caterpillar 1,600 87
Cummins Engine 200 8
Deere 700 48
Dover 600 34
Dresser Industries 1,500 30
Emerson Electric 1,900 113
General Electric 14,700 708
Ingersoll Rand 1,200 42
McDermott International 1,000 26
Pall 1,000 17
Parker Hannifin 400 $ 16
Tenneco 1,500 66
Texas Instruments 900 62
Tyco International 400 19
TOTAL MACHINERY 1,347
MEASURING DEVICES--0.1%
Honeywell 1,100 38
Johnson Controls 300 15
TOTAL MEASURING DEVICES 53
MEDICAL PRODUCTS & SERVICES--1.0%
Bard (C.R.) 900 23
Bausch & Lomb 600 23
Baxter International 2,300 64
Becton Dickinson 800 39
Biomet* 1,800 22
Medtronic 1,200 63
St. Jude Medical 800 29
U.S. Surgical 700 19
Beverly Enterprises* 1,700 26
Columbia HCA Healthcare 3,337 145
National Medical Enterprises* 1,800 31
TOTAL MEDICAL PRODUCTS & SERVICES 484
METALS & MINING--0.1%
Cyprus Amax Minerals 850 27
MISCELLANEOUS BUSINESS SERVICES--1.8%
Automatic Data Processing 1,400 79
Cisco Systems* 2,500 68
Computer Associates International 1,600 71
Computer Sciences* 500 22
Lotus Development* 400 15
Microsoft* 7,700 432
Novell* 3,700 55
Oracle Systems* 2,400 103
Sun Microsystems* 900 26
TOTAL MISCELLANEOUS BUSINESS SERVICES 871
MISCELLANEOUS CONSUMER SERVICES--0.0%
Service International 600 15
MULTI-INDUSTRY--0.6%
Dial 800 17
ITT 1,000 83
Minnesota Mining & Manufacturing 3,500 192
TOTAL MULTI-INDUSTRY 292
OIL - DOMESTIC--1.1%
Ashland Oil 600 21
Atlantic Richfield 1,300 $ 131
Kerr-McGee 400 19
Louisiana Land & Exploration 500 22
Pennzoil 400 19
Phillips Petroleum 2,200 75
Schlumberger 2,000 109
Sun 1,100 32
Unocal 2,400 68
USX-marathon Group 2,600 46
TOTAL OIL-DOMESTIC 542
OIL - INTERNATIONAL--4.1%
Amerada Hess 1,000 47
Amoco 4,100 243
Chevron 5,400 225
Exxon 10,700 616
Mobil 3,300 261
Royal Dutch Petroleum--ADR 4,400 472
Texaco 2,100 126
TOTAL OIL-INTERNATIONAL 1,990
PAPER & PAPER PRODUCTS--1.1%
Champion International 1,000 39
Georgia-Pacific 700 54
International Paper 1,000 79
Kimberly Clark 1,300 76
Mead 600 31
Scott Paper 800 49
Stone Container* 700 14
Temple Inland 500 28
Union Camp 800 39
Westvaco 600 23
Weyerhaeuser 1,700 76
TOTAL PAPER & PAPER PRODUCTS 508
PETROLEUM & FUEL PRODUCTS--0.3%
Burlington Resources 1,300 49
Helmerich & Payne 900 25
Occidental Petroleum 2,500 52
Western Atlas* 700 31
TOTAL PETROLEUM & FUEL PRODUCTS 157
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--0.5%
Eastman Kodak 2,700 139
Polaroid 300 11
Xerox 900 96
TOTAL PHOTOGRAPHIC
EQUIPMENT & SUPPLIES 246
PRECIOUS METALS--0.4%
American Barrick Resources* 2,800 $ 75
Homestake Mining 1,400 30
Newmont Mining 873 39
Placer Dome 2,600 65
TOTAL PRECIOUS METALS 209
PRINTING & PUBLISHING--1.1%
American Greetings, Class A 600 17
Deluxe 1,000 29
Dow Jones 1,100 33
Gannett 1,500 72
John H. Harland 900 19
Knight-Ridder 600 30
Mcgraw Hill 500 37
Moore 800 15
New York Times, Class A 1,400 31
R.R. Donnelley & Sons 1,300 39
Time Warner 3,100 108
Times Mirror, Class A 1,300 40
Tribune 800 43
TOTAL PRINTING & PUBLISHING 513
PROFESSIONAL SERVICES--0.2%
Dun & Bradstreet 1,400 81
RAILROADS--0.7%
Burlington Northern 700 35
Consolidated Rail 900 45
CSX 900 62
Norfolk Southern 1,300 81
Santa Fe Pacific 2,000 45
Union Pacific 1,700 91
TOTAL RAILROADS 359
REPAIR SERVICES--0.0%
Ryder System 500 13
RETAIL--4.0%
Albertson's 2,500 73
American Stores 1,600 40
Circuit City Stores 900 23
Dayton Hudson 700 54
Dillard Department Stores 1,100 29
Gap 1,200 39
Harcourt General 800 28
Home Depot 3,733 157
J.C. Penney 2,000 103
Kmart 4,100 73
Kroger* 900 24
Limited 3,600 71
Lowe's Companies 1,600 $ 62
Marriott International 1,200 35
May Department Stores 2,100 83
McDonalds 5,900 155
Melville 1,100 39
Nordstrom 700 28
Price/Costco* 1,704 27
Sears Roebuck 2,900 139
Toys R Us* 2,400 86
Wal-Mart Stores 19,100 446
Walgreen 1,300 49
Wendy's International 700 10
Winn Dixie Stores 800 40
Woolworth 1,200 21
TOTAL RETAIL 1,934
RUBBER & PLASTIC--0.5%
Armstrong World Industries 400 17
Cooper Tire & Rubber 900 21
Goodyear Tire & Rubber 1,300 43
Illinois Tool Works 900 38
Nike, Class B 800 48
Premark International 600 25
Reebok International 1,000 36
Rubbermaid 1,300 35
TOTAL RUBBER & PLASTIC 263
SEMI-CONDUCTORS/INSTRUMENTS--0.7%
Advanced Micro Devices* 900 27
AMP 1,000 77
Intel 3,500 215
National Semiconductor* 1,000 16
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 335
SPECIALTY MACHINERY--0.2%
Cooper Industries 1,000 40
Westinghouse Electric 2,900 38
TOTAL SPECIALTY MACHINERY 78
STEEL & STEEL WORKS--0.8%
Alcan Aluminium* 1,900 50
Aluminum Company Of America 800 68
Bethlehem Steel* 1,400 29
Englehard 800 22
Inco 1,200 36
Nucor 700 49
Phelps Dodge 800 50
Reynolds Metals 600 34
USX-U.S. Steel Group 600 25
Worthington Industries 1,350 29
TOTAL STEEL & STEEL WORKS 392
TELEPHONES & TELECOMMUNICATIONS--5.2%
Airtouch Communications* 4,100 $ 117
Ameritech 4,500 181
AT&T 13,400 722
Bell Atlantic 3,600 191
BellSouth 4,100 229
GTE 7,900 240
MCI Communications 4,500 115
NYNEX 3,400 131
Pacific Telesis Group 3,500 108
Southwestern Bell 5,000 213
Sprint 2,800 107
U.S. West 4,100 159
TOTAL TELEPHONES
& TELECOMMUNICATIONS 2,513
TRUCKING--0.1%
Pittston Services Group 300 9
Roadway Services 300 17
Yellow 1,100 20
TOTAL TRUCKING 46
WHOLESALE--0.5%
Alco Standard 500 31
Genuine Parts 1,400 48
Grainger (W.W.) 600 36
McKesson 400 41
Salomon 900 36
Supervalu 700 18
Sysco 1,900 48
TOTAL WHOLESALE 258
TOTAL COMMON STOCKS (Cost $27,381) 28,897
U.S. TREASURY OBLIGATIONS--21.6%
U.S. Treasury Notes
5.875%, 03/31/99 $2,760 2,619
6.500%, 04/30/99 1,540 1,496
5.750%, 08/15/03 7,095 6,254
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,858) 10,369
MASTER NOTES--17.0%
Associates Corporation of North
America (A)
4.813%, 10/04/94 2,030 2,030
Barclays (A)
4.779%, 10/03/94 2,125 2,124
Goldman Sachs (A)
4.950%, 10/04/94 2,050 2,050
Heller Financial (A)
4.935%, 10/04/94 1,946 1,946
TOTAL MASTER NOTES
(Cost $8,150) 8,150
REPURCHASE AGREEMENTS--2.0%
Merrill Lynch 4.562%, dated 09/30/94,
matures 10/03/94, repurchase price
$958,435 (collateralized by a U.S.
Treasury Note, total par value
$973,913 interest rate 4.25%, matures
01/31/95, market value $977,424) $ 958
TOTAL REPURCHASE AGREEMENTS
(Cost $958) 958
TOTAL INVESTMENTS--100.9%
(Cost $47,347) 48,374
OTHER ASSETS AND LIABILITIES--(0.9%)
OTHER ASSETS AND LIABILITIES, NET (429)
NET ASSETS
Portfolio shares--Institutional Class ($.0001 par
value--2 billion authorized) based on 4,548,221
outstanding shares 45,298
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 68,088
outstanding shares 680
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 1,045
outstanding shares 11
UNDISTRIBUTED NET INVESTMENT INCOME 10
ACCUMULATED NET REALIZED GAIN ON INVESTMENTS 919
NET UNREALIZED APPRECIATION OF INVESTMENTS 1,027
TOTAL NET ASSETS--100.0% $47,945
NET ASSET VALUE OFFERING PRICE AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 10.38
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.39
MAXIMUM SALES CHARGE OF 4.50% (1) .49
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.88
NET ASSET VALUE AND OFFERING
PRICE PER SHARE--RETAIL CLASS B (2) $ 10.37
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
ADR--American Depository Receipt
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
BALANCED FUND
DESCRIPTION PAR (000)/SHARES VALUE (000)
COMMON STOCKS--54.6%
APPAREL/TEXTILES--1.1%
Liz Claiborne 69,000 $1,570
AUTOMOTIVE--1.8%
Automotive Industries* 31,600 766
General Motors 36,600 1,716
TOTAL AUTOMOTIVE 2,482
BANKS--2.2%
Banc One 36,300 1,084
BayBanks 15,500 853
Chemical Banking 33,000 1,155
TOTAL BANKS 3,092
BUILDING & CONSTRUCTION SUPPLIES--0.4%
Instrument Systems* 65,300 514
CHEMICALS--0.6%
Ferro 33,500 825
COMPUTERS & SERVICES--2.8%
Hewlett-Packard 23,500 2,053
IBM 26,600 1,849
TOTAL COMPUTERS & SERVICES 3,902
DIVERSIFIED--1.0%
International Paper 17,900 1,405
DRUGS--3.1%
American Home Products 32,800 1,968
Bristol-Myers Squibb 22,400 1,285
Upjohn 31,400 1,072
TOTAL DRUGS 4,325
ELECTRICAL UTILITIES--0.5%
Hawaiian Electric Industries 20,700 655
FOOD, BEVERAGE & TOBACCO--3.2%
ConAgra 69,900 2,202
Quaker Oats 11,400 872
Sara Lee 59,900 1,348
TOTAL FOOD, BEVERAGE & TOBACCO 4,422
HOME APPLIANCES--0.8%
Whirlpool 21,400 1,099
INSURANCE--4.0%
AMBAC 40,100 1,484
General Re 15,300 1,620
Providian 50,300 1,584
Western National 63,500 $ 857
TOTAL INSURANCE 5,545
MACHINERY--4.4%
Case Equipment 29,700 579
Caterpillar 20,200 1,093
Deere 21,300 1,462
General Electric 51,400 2,474
Ingersoll-Rand 14,500 513
TOTAL MACHINERY 6,121
MEDICAL--1.2%
Bausch & Lomb 26,800 1,045
Becton, Dickinson 14,500 700
TOTAL MEDICAL 1,745
METALS & MINING--2.5%
Aluminum Company of America 27,100 2,297
Inco 41,300 1,244
TOTAL METALS & MINING 3,541
MULTI-INDUSTRY--3.0%
Dial 35,700 745
ITT 23,300 1,943
Minnesota Mining &
Manufacturing 28,400 1,569
TOTAL MULTI-INDUSTRY 4,257
OIL - INTERNATIONAL--5.7%
Exxon 28,800 1,660
Mobil 20,900 1,654
Royal Dutch Petroleum (ADR) 23,500 2,523
Texaco 35,400 2,124
TOTAL OIL-INTERNATIONAL 7,961
PAPER & PAPER PRODUCTS--3.4%
Bemis 61,400 1,519
Bowater 31,500 917
James River 35,900 871
Scott Paper 22,900 1,400
TOTAL PAPER & PAPER PRODUCTS 4,707
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--2.9%
Eastman Kodak 43,500 2,251
Xerox 16,200 1,729
TOTAL PHOTOGRAPHIC EQUIPMENT & SUPPLIES 3,980
RAILROADS--2.0%
CSX 19,700 1,349
Norfolk Southern 11,500 716
Southern Pacific Rail* 40,700 763
TOTAL RAILROADS 2,828
RETAIL--1.2%
Dayton Hudson 21,200 $ 1,622
RUBBER & PLASTIC--1.9%
Premark International 39,800 1,681
Reebok International 26,000 930
TOTAL RUBBER & PLASTIC 2,611
SEMICONDUCTORS & RELATED DEVICES--2.1%
AMP 12,800 990
Texas Instruments 28,100 1,922
TOTAL SEMICONDUCTORS & RELATED DEVICES 2,912
SPECIALTY MACHINERY--0.7%
York International 23,800 991
TELEPHONES & TELECOMMUNICATION--1.6%
Century Telephone
Enterprises 28,100 811
GTE 47,400 1,440
TOTAL TELEPHONES & TELECOMMUNICATION 2,251
WHOLESALE--0.5%
(W.W.) Grainger 11,100 658
TOTAL COMMON STOCKS (Cost $71,568) 76,021
REAL ESTATE INVESTMENT TRUSTS--2.2%
Debartolo Realty 84,900 1,231
Duke Realty Investments 33,900 848
Simon Property Group 39,900 1,022
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $3,013) 3,101
U.S. TREASURY OBLIGATIONS--25.7%
U.S. Treasury Bond
7.250%, 08/15/22 $11,650 10,744
U.S. Treasury Notes
4.625%, 02/15/96 10,650 10,419
5.750%, 10/31/97 5,740 5,549
5.125%, 11/30/98 4,485 4,155
6.375%, 01/15/00 1,000 960
6.250%, 02/15/03 4,135 3,798
U.S. Treasury STRIP
02/15/99 265 194
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $37,594) 35,819
CORPORATE OBLIGATIONS--5.5%
Bear Stearns
9.125%, 04/15/98 770 803
8.750%, 03/15/04 1,150 1,160
Farmers Group
8.250%, 07/15/96 1,045 1,066
General Foods
6.000%, 06/15/01 $ 860 $ 770
General Motors Acceptance
7.650%, 01/16/98 2,375 2,374
Torchmark
7.875%, 05/15/23 1,700 1,509
TOTAL CORPORATE OBLIGATIONS
(Cost $8,201) 7,682
U.S. GOVERNMENT AGENCY OBLIGATIONS--4.5%
FHLMC
6.250%, 12/15/06 1,725 1,545
6.000%, 11/15/08 2,700 2,293
FNMA
5.450%, 02/20/22 2,700 2,406
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,988) 6,244
ASSET BACKED SECURITIES--1.6%
BW Home Equity Trust Pool 1990-1 A
9.250%, 09/15/05 62 62
Household Finance 1993-2 A3
4.650%, 12/20/08 2,244 2,134
TOTAL ASSET BACKED SECURITIES
(Cost $2,299) 2,196
OTHER MORTGAGE BACKED OBLIGATIONS--1.4%
Drexel Burnham Lambert CMO Trust S 2
9.000%, 08/01/18 560 572
Residential Funding 1992-36 A2
5.700%, 11/25/07 803 776
Resolution Trust 1991-M6 B2 (B)
7.000%, 06/25/21 614 607
TOTAL OTHER MORTGAGE BACKED OBLIGATIONS
(Cost $1,970) 1,955
MASTER NOTES--4.8%
Associates Corporation of North America (A)
4.813%, 10/04/94 1,162 1,162
Barclays (A)
4.779%, 10/03/94
Goldman Sachs (A)
4.950%, 10/04/94 2,704 2,704
Heller Financial (A)
4.935%, 10/04/94 2,796 2,796
TOTAL MASTER NOTES (Cost $6,662) 6,662
TOTAL INVESTMENTS--100.3%
(Cost $138,295) 139,680
OTHER ASSETS AND LIABILITIES--(0.3%)
OTHER ASSETS AND LIABILITIES, NET (391)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) 11,891,257
outstanding shares $122,374
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 1,303,415
outstanding shares 13,523
Portfolio
shares--Retail Class B
($.0001 par value--2
billion authorized)
based on 25,684
outstanding shares 274
Undistributed net
investment income 24
Accumulated net
realized gain on
investments 1,709
Net unrealized
appreciation of
investments 1,385
TOTAL NET
ASSETS:--100.0% $139,289
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 10.54
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.54
MAXIMUM SALES CHARGE OF
4.50% (1) .50
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 11.04
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 10.53
* Non-income producing security
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994. The date shown is the longer
of the reset or demand date.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under the guidelines established by the Board of Directors.
ADR--American Depository Receipt
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
EQUITY INDEX FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--99.4%
AEROSPACE & DEFENSE--0.8%
E Systems 1,700 $ 70
Loral 3,900 154
Martin Marietta 4,200 187
Raytheon 6,300 404
Rockwell International 10,200 349
TRW 3,100 225
TOTAL AEROSPACE & DEFENSE 1,389
AGRICULTURE--0.1%
Pioneer Hi-Bred
International 3,800 120
AIR TRANSPORTATION--0.4%
AMR* 3,500 180
Delta Air Lines 2,100 94
Federal Express* 2,300 142
Southwest Airlines 7,000 158
US Air Group* 5,100 24
TOTAL AIR TRANSPORTATION 598
AIRCRAFT--1.3%
Boeing 17,500 753
General Dynamics 2,800 123
Lockheed 2,900 202
McDonnell Douglas 2,000 231
Northrop 1,700 77
Parker Hannifin 2,300 92
Teledyne 3,700 59
Textron 4,300 219
United Technologies 6,900 432
TOTAL AIRCRAFT 2,188
APPAREL/TEXTILES--0.2%
Hartmarx* 4,300 23
Liz Claiborne 2,500 57
Oshkosh B'Gosh, Class A 2,600 37
Russell 1,200 37
Springs Industries 1,100 40
V.F. 2,600 128
TOTAL APPAREL/TEXTILES 322
AUTOMOTIVE--2.9%
Allied Signal 12,800 437
Briggs And Stratton 900 63
Chrysler 17,200 772
Dana 4,400 123
Echlin 3,200 97
Fleetwood Enterprises 2,600 65
Ford Motor 48,800 1,354
General Motors 36,300 1,703
Navistar International* 2,600 $ 36
Paccar 1,495 68
Varity* 1,900 71
TOTAL AUTOMOTIVE 4,789
BANKS--5.7%
Banc One 19,767 591
Bank Of Boston 4,300 114
Bankamerica 17,900 790
Bankers Trust New York 3,900 260
Barnett Banks 4,100 181
Boatmens Bancshares 5,200 162
Chase Manhattan 8,600 298
Chemical Banking 12,300 431
Citicorp 19,900 844
Corestates Financial Group 6,000 160
First Chicago 5,500 252
First Fidelity Bancorp 3,500 147
First Interstate Bancorp 3,900 316
First Union 9,300 402
Fleet Financial Group 6,000 226
Golden West Financial 3,000 119
Great Western Financial 6,800 131
H.F. Ahmanson 5,900 123
J.P. Morgan 9,400 571
Keycorp 11,100 339
MBNA 6,900 160
Nationsbank 13,100 642
NBD Bancorp 7,200 206
Norwest 16,300 403
PNC Bank 12,300 318
Shawmut National 7,800 162
Suntrust Banks 6,000 293
U S Bancorp Oregon 4,300 110
Wachovia 7,400 239
Wells Fargo 2,700 392
TOTAL BANKS 9,382
BEAUTY PRODUCTS--1.8%
Alberto Culver 3,400 79
Avon Products 3,500 209
Colgate Palmolive 7,700 447
Ecolab 3,200 70
International Flavors &
Fragrances 4,800 200
Procter & Gamble 33,300 1,985
TOTAL BEAUTY PRODUCTS 2,990
BROADCASTING, NEWSPAPERS & ADVERTISING--1.0%
Capital Cities ABC 7,000 574
CBS 507 163
Comcast, Class A Special 10,200 156
Interpublic Group 2,600 86
Scientific-Atlanta 1,900 $ 78
Tele Communications, Class A* 28,100 623
TOTAL BROADCASTING, NEWSPAPERS
& ADVERTISING 1,680
BUILDING & CONSTRUCTION--0.4%
Centex 1,600 37
Fluor 3,900 195
Foster Wheeler 3,400 117
Halliburton 4,700 148
Mcdermott International 3,900 100
Pulte 1,800 39
TOTAL BUILDING & CONSTRUCTION 636
CHEMICALS--3.8%
Air Products & Chemical 5,200 243
Dow Chemical 13,400 1,049
E.I. Dupont De Nemour 33,000 1,913
Eastman Chemical 3,875 211
Eli Lilly 14,100 816
First Mississippi 4,200 85
FMC* 1,500 93
Great Lakes Chemical 3,500 206
Hercules 2,300 237
Monsanto 5,400 434
Morton International 7,800 215
Nalco Chemical 3,400 112
Rohm & Haas 2,800 160
Sigma Aldrich 2,400 85
Union Carbide 7,400 252
W.R. Grace 4,300 178
TOTAL CHEMICALS 6,289
COMMUNICATIONS EQUIPMENT--1.6%
Andrew* 1,900 95
Motorola 27,100 1,430
Northern Telecom 11,200 389
Sprint 16,700 637
Zenith Electronics* 3,200 36
TOTAL COMMUNICATIONS EQUIPMENT 2,587
COMPUTERS & SERVICES--3.0%
Amdahl* 11,300 99
Apple Computer 5,700 192
Compaq Computer* 12,300 401
Computer Associates International 8,200 365
Cray Research* 3,000 62
Data General* 5,800 58
Digital Equipment* 6,300 167
DSC Communications* 6,000 171
Harris 1,800 $ 88
Hewlett Packard 11,900 1,040
Intergraph* 13,100 120
International Business Machines 28,300 1,965
Tandem Computers* 5,200 85
Tandy 4,080 175
TOTAL COMPUTERS & SERVICES 4,988
CONCRETE & MINERAL PRODUCTS--0.1%
Armstrong World Industries 1,100 48
Owens Corning Fiberglass* 1,500 50
TOTAL CONCRETE & MINERAL PRODUCTS 98
CONSUMER PRODUCTS--0.1%
Brown Group 2,000 68
Stride Rite 1,600 22
TOTAL CONSUMER PRODUCTS 90
CONTAINERS & PACKAGING--0.2%
Ball 1,900 54
Crown Cork & Seal* 4,100 158
Newell 7,200 160
TOTAL CONTAINERS & PACKAGING 372
DRUGS--6.9%
Abbott Laboratories 38,700 1,214
Allergan 2,200 56
Alza, Class A* 2,600 54
American Cyanamid 5,100 507
American Home Products 14,600 876
Amgen* 6,500 346
Baxter International 13,500 380
Bristol-myers Squibb 24,900 1,429
Johnson & Johnson 31,300 1,616
Mallinckrodt Group 3,000 97
Merck 62,300 2,211
National Intergroup* 4,300 68
Pfizer 15,600 1,078
Schering Plough 9,300 660
Upjohn 7,900 270
Warner Lambert 6,300 506
TOTAL DRUGS 11,368
ELECTRICAL SERVICES--3.3%
American Electric Power 8,300 260
Baltimore Gas & Electric 7,300 168
Carolina Power & Light 7,600 200
Central & South West 8,700 194
Consolidated Edison New York 10,400 259
Detroit Edison 6,800 173
Dominion Resources Of Virginia 7,400 276
Duke Power 10,400 $ 406
Entergy 10,800 251
Houston Industries 5,800 204
Niagara Mohawk Power 6,000 80
Northern States Power 2,700 114
Ohio Edison 7,600 144
Pacific Gas & Electric 20,000 455
Pacificorp 12,100 204
PECO Energy 10,800 274
PSI Resources 3,200 72
Public Service Enterprise Group 12,300 323
SCE 19,400 252
Southern 31,600 589
Texas Utilities 10,000 326
Union Electric 6,300 220
TOTAL ELECTRICAL SERVICES 5,444
ELECTRICAL TECHNOLOGY--2.9%
AMP 4,700 364
General Electric 83,300 4,008
Texas Instruments Incorporated 4,600 315
TOTAL ELECTRICAL TECHNOLOGY 4,687
ENTERTAINMENT--1.0%
Blockbuster Entertainment 11,700 335
King World Productions* 1,700 65
Unicom 9,600 214
Walt Disney 26,100 1,015
TOTAL ENTERTAINMENT 1,629
ENVIRONMENTAL SERVICES--0.6%
Browning Ferris Industries 8,100 257
Rollins Enviromental Services* 13,300 81
WMX Technologies 24,300 702
TOTAL ENVIRONMENTAL SERVICES 1,040
FINANCIAL SERVICES--2.5%
American Express 25,700 781
Beneficial 2,800 114
Dean Witter Discover 7,886 297
Eaton 4,200 200
Federal Home Loan Mortgage 9,100 486
Federal National Mortgage 13,300 1,047
Household International 4,300 154
Mellon Bank 4,700 264
Merrill Lynch 9,600 332
Salomon Brothers 5,300 209
Transamerica 3,423 172
Unisys* 5,600 60
TOTAL FINANCIAL SERVICES 4,116
FOOD, BEVERAGE & TOBACCO--8.9%
Adolph Coors, Class B 3,600 $ 67
American Brands 9,300 337
Anheuser Busch 12,900 656
Archer Daniels Midland 16,122 419
Borden 5,000 69
Brown Forman, Class B 3,300 89
Campbell Soup 11,800 466
Coca Cola 63,000 3,062
Conagra 11,200 353
CPC International 6,900 349
General Mills 7,200 416
H.J. Heinz 12,400 454
Hershey Foods 4,700 212
Kellogg 10,600 608
N V Unilever 7,800 884
Pepsico 38,900 1,289
Pet 3,700 73
Philip Morris 42,700 2,610
Quaker Oats 3,300 252
Ralston-ralston Purina Group 5,000 207
Sara Lee 25,300 569
Seagram 17,500 529
UST 8,900 255
Whitman 8,600 144
Wrigley William Jr 6,900 281
TOTAL FOOD, BEVERAGE & TOBACCO 14,650
GAS/NATURAL GAS--1.1%
Coastal 4,800 134
Columbia Gas Systems* 2,200 59
Consolidated Natural Gas 5,700 222
Eastern Enterprises 4,700 123
Enron 11,800 357
Nicor 2,200 53
Noram Energy 15,200 99
Oneok 4,700 79
Pacific Enterprises 3,200 68
Panhandle Eastern 5,300 123
Peoples Energy 4,900 129
Sonat 4,400 138
Williams Companies 5,000 150
TOTAL GAS/NATURAL GAS 1,734
GLASS PRODUCTS--0.4%
Corning 9,400 304
PPG Industries 9,600 381
TOTAL GLASS PRODUCTS 685
HOTELS & LODGING--0.3%
Hilton Hotels 2,200 $ 132
Marriott 6,200 179
Promus Companies* 4,800 161
TOTAL HOTELS & LODGING 472
HOUSEHOLD APPLIANCES--1.0%
Clorox 2,400 125
Gillette 10,200 722
Illinois Tool Works 4,700 201
Maytag 3,100 50
National Service Industries 2,800 74
Raychem 2,100 86
Sherwin Williams 3,300 103
Snap-On Tools 1,200 42
Stanley Works 1,800 73
Whirlpool 3,300 170
TOTAL HOUSEHOLD APPLIANCES 1,646
HOUSEHOLD FURNITURE & FIXTURES--0.1%
Bassett Furniture Industries 1,687 44
Masco 7,100 171
TOTAL HOUSEHOLD FURNITURE & FIXTURES 215
HOUSEHOLD PRODUCTS--0.1%
Premark International 3,200 135
INSURANCE--3.2%
Aetna Life & Casualty 5,200 241
Alexander & Alexander Services 4,200 82
American General 9,800 266
American International Group 15,450 1,373
Chubb 4,700 334
Cigna 4,000 247
Continental 3,500 47
FPL Group 8,600 280
General Re 3,800 402
Jefferson-Pilot 2,550 135
Lincoln National 3,800 142
Marsh & McLennan Companies 3,400 266
Providian 4,000 126
Safeco 2,700 139
St Paul Companies 3,800 154
Torchmark 2,750 121
Travelers 14,825 487
UNUM 3,700 170
USF & G 9,500 126
USLife 1,400 46
TOTAL INSURANCE 5,184
LEASING & RENTING--0.2%
Pitney Bowes 7,100 $ 252
LUMBER & WOOD PRODUCTS--0.3%
Georgia Pacific 4,000 306
Louisiana Pacific 5,100 169
Skyline 4,000 81
TOTAL LUMBER & WOOD PRODUCTS 556
MACHINERY--1.9%
Baker Hughes 5,400 101
Black And Decker 3,900 85
Brunswick 4,400 89
Caterpilliar 9,900 536
Cincinnati Milacron 2,200 57
Clark Equipment* 900 62
Crane 1,600 41
Deere 3,600 247
Dover 2,100 119
Dresser Industries 8,000 162
Emerson Electric 10,900 650
Giddings & Lewis 2,300 41
Harnischfeger Industries 2,800 74
Ingersoll Rand 4,300 152
Outboard Marine 4,900 111
SPX 4,700 81
Tenneco 8,000 353
Timken 1,500 56
Tyco International 1,700 81
Zurn Industries 3,700 73
TOTAL MACHINERY 3,171
MEASURING DEVICES--0.4%
General Signal 3,000 105
Honeywell 5,700 196
Johnson Controls 1,700 85
Millipore 2,000 108
Pall 4,000 69
Perkin Elmer 2,600 82
Tektronix 2,400 93
TOTAL MEASURING DEVICES 738
MEDICAL PRODUCTS & SERVICES--1.7%
Bausch & Lomb 2,200 86
Becton Dickinson 3,900 188
Beverly Enterprises* 4,100 63
Biomet* 7,300 90
C.R. Baird 2,700 68
Columbia/HCA Healthcare 17,437 759
Community Psychiatric Centers 5,500 75
Manor Care 2,300 61
Medtronic 5,000 264
National Medical Enterprises 7,800 $ 134
St. Jude Medical 2,800 100
U.S. Healthcare 7,500 349
United Healthcare 8,000 424
United States Surgical 4,200 113
TOTAL MEDICAL PRODUCTS & SERVICES 2,774
METALS & MINING--1.5%
Alcan Aluminium* 12,500 330
Aluminum America 4,000 336
Armco* 12,200 73
Asarco 3,200 105
Bethlehem Steel* 3,500 74
Cyprus Amax Minerals 4,450 139
Englehard 4,275 115
Inco Limited 5,800 175
Inland Steel Industries* 2,100 83
Newmont Mining 4,243 191
Nucor 3,900 272
Phelps Dodge 3,300 205
Reynolds Metals 2,500 142
USX U.S. Steel Group 3,000 126
Worthington Industries 3,150 68
TOTAL METALS & MINING 2,434
MISCELLANEOUS BUSINESS SERVICES--2.3%
Autodesk 1,400 88
Automatic Data Processing 6,600 370
Ceridian* 3,500 86
Cisco Systems* 11,600 318
Computer Sciences* 2,400 104
Lotus Development* 2,000 74
Microsoft* 28,000 1,571
Novell* 17,400 257
Ogden 3,200 67
Oracle Systems* 14,100 606
Safety Kleen 5,100 83
Shared Medical Systems 2,500 69
Sun Microsystems* 3,500 103
TOTAL MISCELLANEOUS BUSINESS SERVICES 3,796
MISCELLANEOUS CONSUMER SERVICES--0.2%
H & R Block 4,800 220
Service International 3,400 88
TOTAL MISCELLANEOUS CONSUMER SERVICES 308
MULTI-INDUSTRY--1.0%
Dial 3,200 67
ITT 5,500 459
Minnesota Mining & Manufacturing 20,600 1,138
TOTAL MULTI-INDUSTRY 1,664
OFFICE EQUIPMENT--0.3%
Xerox 5,100 $ 544
OIL - DOMESTIC--1.4%
Amerada Hess* 3,900 181
Ashland Oil 2,100 74
Burlington Resources 6,000 225
Enserch 6,000 83
Helmerich & Payne 2,100 59
Kerr-McGee 2,900 141
Louisiana Land & Exploration 1,000 44
Maxus Energy* 17,100 77
Oryx Energy 8,800 122
Pennzoil 2,100 98
Rowan* 7,200 52
Santa Fe Energy Resources 8,400 78
Schlumberger 11,600 632
Transco Energy 3,800 57
Unocal 10,700 302
Western Atlas* 2,100 92
TOTAL OIL-DOMESTIC 2,317
OIL - INTERNATIONAL--8.0%
Amoco 24,200 1,434
Atlantic Richfield 7,400 746
Chevron 31,700 1,320
Exxon 60,500 3,487
Mobil 19,400 1,535
Occidental Petroleum 14,900 313
Phillips Petroleum 12,100 414
Royal Dutch Petroleum 26,100 2,802
Sun 5,500 158
Texaco 12,600 756
USX Marathon Group 13,300 236
TOTAL OIL-INTERNATIONAL 13,201
PAPER & PAPER PRODUCTS--1.8%
Avery Dennison 1,800 62
Bemis 2,400 59
Boise Cascade 4,200 124
Champion International 4,300 167
Federal Paper Board 3,900 123
International Paper 6,000 470
James River 5,700 138
Kimberly Clark 7,400 435
Mead 2,300 120
Potlatch 1,700 70
Scott Paper 3,600 220
Stone Container 2,400 47
Temple Inland 2,100 116
Union Camp 3,200 157
Westvaco 3,800 145
Weyerhaeuser 9,500 $ 424
TOTAL PAPER & PAPER PRODUCTS 2,877
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--0.6%
Eastman Kodak 15,500 803
Polaroid 3,000 105
TOTAL PHOTOGRAPHIC EQUIPMENT & SUPPLIES 908
PRECIOUS METALS--0.5%
American Barrick Resources* 13,100 349
Echo Bay Mines 5,600 77
Homestake Mining 6,400 136
Placer Dome 10,800 271
TOTAL PRECIOUS METALS 833
PRINTING & PUBLISHING--1.5%
American Greetings, Class A 4,000 116
Deluxe 3,200 94
Dow Jones 4,300 129
Gannett 7,600 365
John H. Harland 5,500 116
Knight-Ridder 2,000 100
McGraw Hill 2,000 147
Meredith 1,800 84
Moore 4,500 83
New York Times, Class A 6,400 140
R.R. Donnelly & Sons 6,500 195
Time Warner 18,400 643
Times Mirror, Class A 5,500 169
Tribune 2,900 157
TOTAL PRINTING & PUBLISHING 2,538
PROFESSIONAL SERVICES--0.3%
Dun & Bradstreet 8,300 478
National Education* 15,500 79
TOTAL PROFESSIONAL SERVICES 557
RAILROADS--1.1%
Burlington Northern 4,100 206
Conrail 3,700 183
CSX 4,800 329
Norfolk Southern 6,400 398
Santa Fe Pacific 8,400 190
Union Pacific 10,000 537
TOTAL RAILROADS 1,843
REAL ESTATE--0.1%
Kaufman & Broad Home 7,800 106
REPAIR SERVICES--0.0%
Ryder System 2,500 64
RETAIL--7.1%
Albertsons 13,000 $ 379
American Stores 6,600 167
Bruno's 7,100 66
Charming Shoppes 14,400 117
Circuit City Stores 3,200 83
Dayton Hudson 3,300 252
Dillard Department Stores 5,100 136
Gap 6,700 220
Genesco* 5,700 14
Giant Food 2,400 52
Great Atlantic & Pacific 2,200 56
Harcourt General 4,100 141
Hasbro 4,400 130
Home Depot 21,133 887
J.C. Penney 11,700 604
K Mart 22,200 397
Kroger* 6,800 181
Longs Drug Stores 2,400 83
Lowes 8,700 336
Lubys Cafeterias 1,500 35
Mattel 7,812 212
May Department Stores 11,500 453
McDonalds 33,400 877
Melville 5,000 178
Mercantile Stores 1,800 75
Nordstrom 4,500 180
Pep Boys-Manny Moe & Jack 2,900 101
Price/Costco* 12,256 197
Rite Aid 2,600 54
Ryans Family Steakhouses* 17,800 106
Sears Roebuck 16,400 787
Shoneys* 7,800 108
The Limited 17,700 347
TJX Companies 2,300 48
Toys R Us* 13,100 467
Wal-Mart Stores 111,900 2,613
Walgreen 5,200 196
Wendy's International 5,800 84
Winn Dixie Stores 3,800 190
Woolworth 5,400 94
TOTAL RETAIL 11,703
RUBBER & PLASTIC--0.5%
B.F. Goodrich 1,000 42
Cooper Tire & Rubber 3,000 70
Goodyear Tire & Rubber 7,000 234
Nike, Class B 3,400 200
Reebok International 3,500 125
Rubbermaid 6,700 178
TOTAL RUBBER & PLASTIC 849
SEMI-CONDUCTORS/INSTRUMENTS--0.9%
Advanced Micro Devices* 3,300 $ 98
Intel 20,400 1,255
M/A-Com* 5,900 45
National Semiconductor* 5,000 78
Thomas & Betts 800 54
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 1,530
SPECIALTY MACHINERY--0.9%
Ameritech 26,300 1,058
Cooper Industries 5,100 205
Westinghouse Electric 16,200 211
TOTAL SPECIALTY MACHINERY 1,474
TELEPHONES & TELECOMMUNICATION--8.2%
Airtouch Communications* 23,200 664
American Telephone & Telegraph 86,000 4,646
Bell Atlantic 21,200 1,124
Bellsouth 24,200 1,349
GTE 46,600 1,415
MCI Communications 25,500 653
NYNEX 21,300 820
Pacific Telesis Group 20,500 630
Southwestern Bell 29,200 1,241
U S West 22,100 856
TOTAL TELEPHONES & TELECOMMUNICATION 13,398
TRUCKING--0.2%
Consolidated Freightways* 3,100 68
Pittston Services Group 2,000 57
Roadway Services 1,800 104
Yellow 1,500 28
TOTAL TRUCKING 257
WHOLESALE--0.8%
Alco Standard 2,400 149
Cummins Engine 1,200 47
Fleming 3,200 75
Genuine Parts 6,450 225
McKesson 2,200 224
Praxair 8,400 205
Super-Valu 3,100 81
Sysco 8,700 221
W W Grainger 2,000 119
TOTAL WHOLESALE 1,346
TOTAL COMMON STOCKS (Cost $157,399) 163,561
MASTER NOTES--0.3%
Heller Master Note--(A)
4.935%, 10/03/94 $451 $ 451
TOTAL MASTER NOTES (Cost $451) 451
TOTAL INVESTMENTS--99.7%
(Cost $157,850) 164,012
OTHER ASSETS AND LIABILITIES--0.3%
Other assets and liabilities, net 463
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 15,335,999 outstanding shares 156,385
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
70,968 outstanding shares 727
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based on
2,686 outstanding shares 29
Undistributed net investment income 38
Accumulated net realized gain on
investments 1,134
Net unrealized appreciation of
investments 6,162
TOTAL NET ASSETS:--100.0% $164,475
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 10.67
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.68
MAXIMUM SALES CHARGE OF 4.50% (1) .50
OFFERING PRICE PER SHARE-- RETAIL CLASS A $ 11.18
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 10.66
* Non-income producing security
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994. The date shown is the longer
of the reset or demand date.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
EQUITY INCOME FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--52.6%
BANKS--3.1%
National City 21,000 $591
CHEMICALS--0.9%
Dupont (E.I.) de Nemours 3,000 174
DRUGS--4.5%
Abbott Laboratories 14,000 439
Johnson & Johnson 5,900 305
Pfizer 1,900 131
TOTAL DRUGS 875
ELECTRICAL UTILITIES--4.5%
Detroit Edison 15,000 382
FPL Group 7,000 228
Unicom 11,800 263
TOTAL ELECTRICAL UTILITIES 873
FINANCIAL SERVICES--0.8%
American Express 4,900 149
FOOD, BEVERAGE & TOBACCO--5.2%
Pepsico 4,700 156
Philip Morris 9,300 568
Sara Lee 12,600 284
TOTAL FOOD, BEVERAGE & TOBACCO 1,008
HOUSEHOLD PRODUCTS--2.7%
Newell 23,000 512
INSURANCE--1.2%
Old Republic International 2,200 46
Providian 6,000 189
TOTAL INSURANCE 235
MACHINERY--6.0%
General Electric 17,000 818
Tenneco 7,900 349
TOTAL MACHINERY 1,167
MARINE TRANSPORTATION--0.9%
Anangel-American Shipholdings
(ADR) 11,700 181
MINING--0.3%
Great Northern Iron Ore Properties 1,300 62
OIL - DOMESTIC--4.7%
Atlantic Richfield 8,000 807
Schlumberger 2,000 109
TOTAL OIL-DOMESTIC 916
OIL - INTERNATIONAL--6.8%
Amoco 5,100 $ 302
Exxon 8,000 461
Mobil 6,900 546
TOTAL OIL-INTERNATIONAL 1,309
PAPER & PAPER PRODUCTS--2.4%
Kimberly Clark 7,900 464
REAL ESTATE--1.2%
Burger King Investors Master L.P. 13,500 228
RETAIL--1.1%
Albertson's 4,000 117
Sears Roebuck 2,000 96
TOTAL RETAIL 213
TELEPHONES & TELECOMMUNICATION--6.3%
AT&T 5,900 319
NYNEX 13,000 500
Pacific Telesis Group 13,000 400
TOTAL TELEPHONES & TELECOMMUNICATION 1,219
TOTAL COMMON STOCKS (Cost $10,188) 10,176
REAL ESTATE INVESTMENT TRUSTS--11.9%
Crescent Real Estate Equities 3,800 107
Healthcare Realty Trust 19,500 407
Manufactured Home Communities 21,000 420
National Golf Properties 22,700 459
Simon Property Group 21,000 535
Weeks* 17,500 359
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $2,326) 2,287
PREFERRED STOCKS--6.8%
AUTOMOTIVE--5.1%
Ford Motor, Ser A, CV, $4.20 7,500 688
General Motors, Ser C, CV, $3.25 5,000 288
TOTAL AUTOMOTIVE 976
BANKS--1.3%
Citicorp, Ser 15, CV, $1.217 13,300 259
RETAIL--0.4%
Sears Roebuck, Ser A, CV 1,500 84
TOTAL PREFERRED STOCKS (Cost $1,348) 1,319
CONVERTIBLE BONDS--12.2%
Conner Peripheral
6.500%, 03/01/02 $200 $ 157
General Instrument
5.000%, 06/15/00 350 458
Inco
5.750%, 07/01/04 400 478
Integrated Health
Services
6.000%, 01/01/03 250 301
Price
6.750%, 03/01/01 375 363
Vencor
6.000%, 10/01/02 500 602
TOTAL CONVERTIBLE BONDS (Cost
$2,346) 2,359
REPURCHASE AGREEMENTS--15.4%
J.P. Morgan 4.594%, dated
09/30/94, matures 10/03/94,
repurchase price $1,948,817
(collateralized by a Treasury
Interest Strip Coupon, total par
value $10,544,810, matures
02/15/15, market value $1,987,064) 1,948
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $1,032,963
(collateralized by a U.S. Treasury
Note, total par value $1,049,644,
interest rate 4.25%, matures
01/31/95, market value $1,053,428) 1,033
TOTAL REPURCHASE AGREEMENTS (Cost
$2,981) 2,981
TOTAL INVESTMENTS--98.9% (Cost
$19,189) $19,122
* Non-income producing security
ADR--American Depository Receipt
DIVERSIFIED GROWTH FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCK--84.2%
AUTOMOTIVE--2.7%
Ford Motor 27,000 $ 749
General Motors, Class E 4,000 152
TOTAL AUTOMOTIVE 901
COMMUNICATIONS EQUIPMENT--2.8%
Nokia (ADR) 16,100 942
COMPUTER PERIPHERAL EQUIPMENT--2.1%
Cisco Systems* 25,700 704
ELECTRICAL UTILITIES--.9%
Detroit Edison 12,000 306
ENVIRONMENTAL SERVICES--1.7%
Wmx Technologies 20,000 578
FINANCIAL SERVICES--3.9%
American Express 16,500 501
Federal National Mortgage 10,400 819
TOTAL FINANCIAL SERVICES 1,320
FOOD, BEVERAGE & TOBACCO--4.2%
Cott 11,600 154
Pepsico 16,000 530
Philip Morris Companies 12,000 733
TOTAL FOOD, BEVERAGE & TOBACCO 1,417
HOUSEHOLD PRODUCTS--1.4%
Newell 21,000 467
INSURANCE--0.6%
Old Republic
International 10,000 209
MACHINERY--5.3%
General Electric 23,300 1,121
Tenneco Incoporated 15,400 680
TOTAL MACHINERY 1,801
MARINE TRANSPORTATION--.9%
Royal Caribbean Cruises 12,300 320
MEASURING DEVICES--1.2%
MTS Systems 8,000 194
Thermo Electron* 4,500 206
TOTAL MEASURING DEVICES 400
MEDICAL PRODUCTS & SERVICES--3.8%
Healthtrust* 24,400 803
Medtronic 9,200 486
TOTAL MEDICAL PRODUCTS & SERVICES 1,289
MISCELLANEOUS BUSINESS SERVICES--6.2%
Microsoft* 5,500 $ 309
Novell* 23,500 347
Oracle Systems* 23,100 993
Synopsys* 2,700 122
The Bisys Group* 16,000 340
TOTAL MISCELLANEOUS
BUSINESS SERVICES 2,111
OIL/CHEMICALS--10.5%
Amoco 9,000 533
Atlantic Richfield 8,700 876
Dupont (E.I.) de Nemours 10,500 609
Exxon 8,800 507
Mobil 4,600 364
Schlumberger 6,400 348
Sigma-Aldrich 9,000 320
TOTAL OIL/CHEMICALS 3,557
PAPER & PAPER PRODUCTS--2.9%
Kimberly-Clark 6,700 394
Weyerhaeuser 12,900 575
TOTAL PAPER & PAPER PRODUCTS 969
PHARMACEUTICAL PREPARATIONS--7.1%
Abbott Laboratories 23,500 737
Johnson & Johnson 16,000 826
Perrigo* 20,000 270
Pfizer 8,000 553
TOTAL PHARMACEUTICAL PREPARATIONS 2,386
RAILROADS--0.7%
Southern Pacific Rail* 13,000 244
REAL ESTATE--4.0%
Debartolo Realty 26,000 377
National Golf Properties 15,000 304
Simon Property Group 25,700 658
TOTAL REAL ESTATE 1,339
RETAIL--7.8%
Albertson's 19,300 562
Dayton Hudson 8,000 612
McDonald's 26,000 683
Orchard Suppply Hardware
Stores* 12,900 119
Sears & Roebuck 13,500 648
TOTAL RETAIL 2,624
SEMI-CONDUCTORS/INSTRUMENTS--1.9%
Intel 10,400 640
SPECIALTY MACHINERY--2.8%
York International 23,000 $ 957
STEEL & STEEL WORKS--3.0%
Ak Steel Holding* 12,000 390
Inco 15,200 458
Rouge Steel, Class A 6,000 176
TOTAL STEEL & STEEL WORKS 1,024
TELEPHONES & TELECOMMUNICATION--4.9%
Airtouch
Communications* 14,700 421
Pacific Telesis Group 14,000 431
Tele Danmark (ADR)* 5,500 150
Vodafone (ADR) 20,500 642
TOTAL TELEPHONES &
TELECOMMUNICATION 1,644
TRUCKING--0.9%
Fritz Companies* 8,100 288
TOTAL COMMON STOCKS (Cost $28,121) 28,437
CONVERTIBLE BONDS--1.9%
General Instrument Cv
5.000%, 06/15/00 $ 500 654
TOTAL CONVERTIBLE BONDS (Cost
$687) 654
REPURCHASE AGREEMENTS--9.2%
J.P. Morgan 4.594%, dated
09/30/94, matures 10/03/94,
repurchase price $1,779,444
(collateralized by a Treasury
Interest Coupon Note, par value
$9,628,355, maturity 02/15/15,
market value $1,814,367) 1,779
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $1,345,262
(collateralized by a U.S. Treasury
Note, par value $1,366,987,
interest rate 4.25%, maturity of
01/31/95, market value $1,371,915) 1,345
TOTAL REPURCHASE AGREEMENTS
(Cost $3,124) 3,124
TOTAL INVESTMENTS--95.3% (Cost
$31,932) $32,215
* Non-income producing security
ADR--American Depository Receipt
STOCK FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--92.5%
APPAREL/TEXTILES--1.9%
Liz Claiborne 134,900 $ 3,069
AUTOMOTIVE--2.9%
Automotive Industries* 61,100 1,482
General Motors 69,500 3,257
TOTAL AUTOMOTIVE 4,739
BANKS--3.6%
Banc One 61,400 1,834
BayBanks 32,500 1,788
Chemical Banking 62,600 2,191
TOTAL BANKS 5,813
BUILDING & CONSTRUCTION SUPPLIES--0.6%
Instrument Systems* 123,400 972
CHEMICALS--0.9%
Ferro 62,200 1,532
COMPUTERS & SERVICES--4.5%
Hewlett Packard 44,500 3,888
IBM 50,400 3,503
TOTAL COMPUTERS & SERVICES 7,391
DIVERSIFIED--1.6%
International Paper 32,900 2,583
DRUGS--4.6%
American Home Products 59,500 3,570
Bristol-Myers Squibb 39,200 2,249
Upjohn 51,900 1,771
TOTAL DRUGS 7,590
ELECTRICAL UTILITIES--0.7%
Hawaiian Electric 38,100 1,205
FOOD, BEVERAGE & TOBACCO--5.1%
ConAgra 133,700 4,212
Quaker Oats 21,300 1,629
Sara Lee 112,000 2,520
TOTAL FOOD, BEVERAGE & TOBACCO 8,361
HOME APPLICANCES--1.4%
Whirlpool 44,700 2,296
INSURANCE--6.9%
AMBAC 81,600 3,019
General Re 32,000 3,388
Providian 102,400 3,226
Western National 120,300 $ 1,624
TOTAL INSURANCE 11,257
MACHINERY--6.9%
Case Equipment 55,400 1,080
Caterpillar 36,600 1,981
Deere 39,400 2,704
General Electric 95,000 4,572
Ingersoll Rand 28,900 1,022
TOTAL MACHINERY 11,359
MEDICAL--2.0%
Bausch & Lomb 49,600 1,934
Becton, Dickinson 28,100 1,356
TOTAL MEDICAL 3,290
METALS & MINING--4.3%
Aluminum Company of America 51,600 4,373
Inco 87,400 2,633
TOTAL METALS & MINING 7,006
MULTI-INDUSTRY--5.1%
Dial 67,800 1,415
ITT 45,000 3,752
Minnesota Mining &
Manufacturing 58,300 3,221
TOTAL MULTI-INDUSTRY 8,388
OIL - INTERNATIONAL--9.3%
Exxon 53,600 3,089
Mobil 39,700 3,141
Royal Dutch Petroleum (ADR) 45,500 4,887
Texaco 67,300 4,038
TOTAL OIL-INTERNATIONAL 15,155
PAPER & PAPER PRODUCTS--5.4%
Bemis 116,800 2,892
Bowater 57,800 1,683
James River 69,500 1,685
Scott Paper 42,700 2,610
TOTAL PAPER & PAPER PRODUCTS 8,870
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--4.6%
Eastman Kodak 82,700 4,280
Xerox 30,700 3,277
TOTAL PHOTOGRAPHIC EQUIPMENT
& SUPPLIES 7,557
RAILROADS--3.5%
CSX 40,500 $ 2,774
Norfolk Southern 21,900 1,363
Southern Pacific Rail* 82,700 1,551
TOTAL RAILROADS 5,688
RETAIL--2.0%
Dayton Hudson 42,000 3,213
RUBBER & PLASTIC--3.0%
Premark International 75,200 3,177
Reebok International 49,700 1,777
TOTAL RUBBER & PLASTIC 4,954
SEMICONDUCTORS & RELATED DEVICES--3.2%
AMP 25,100 1,942
Texas Instruments 48,500 3,316
TOTAL SEMICONDUCTORS & RELATED DEVICES 5,258
SPECIALTY MACHINERY--1.1%
York International 43,800 1,823
TELEPHONES & TELECOMMUNICATION--3.0%
Century Telephone Enterprises 60,100 1,735
GTE 103,700 3,150
TOTAL TELEPHONES & TELECOMMUNICATION 4,885
WHOLESALE--0.7%
(W.W.) Grainger 20,300 1,203
TOTAL COMMON STOCKS (Cost $137,541) 145,457
REAL ESTATE INVESTMENT TRUSTS--3.7%
Debartolo Realty 161,400 2,340
Duke Realty Investments 65,400 1,635
Simon Property Group 78,500 2,012
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $5,842) 5,987
MASTER NOTES--9.8%
Associates Corporation of North America (A)
4.813%, 10/04/94 $2,066 2,066
Barclays (A)
4.779%, 10/03/94 2,225 2,225
Goldman Sachs (A)
4.950%, 10/04/94 5,876 5,876
Heller Financial (A)
4.935%, 10/04/94 5,905 5,905
TOTAL MASTER NOTES (Cost $16,072) 16,072
TOTAL INVESTMENTS--102.3%
(Cost $159,455) 167,516
OTHER ASSETS AND LIABILITIES--(2.3%)
Other assets and liabilties, net (3,800)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
9,388,570 outstanding
shares $140,908
Portfolio shares of
Retail Class A ($.0001
par value--2 billion
authorized) based on
510,016 outstanding
shares 7,677
Portfolio shares of
Retail Class B ($.0001
par value--2 billion
authorized) based on
20,964 outstanding
shares 351
Undistributed net
investment income 52
Accumulated net
realized gain on
investments 6,667
Net unrealized
appreciation of
investments 8,061
TOTAL NET
ASSETS:--100.0% $163,716
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 16.50
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 16.51
MAXIMUM SALES CHARGE OF
4.50% (1) .78
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 17.29
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 16.49
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30,1994. The
date shown is the longer of the reset date or demand date.
ADR--American Depository Receipt
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
SPECIAL EQUITY FUND
DESCRIPTION SHARES/PAR (000) VALUE (000)
COMMON STOCK--75.5%
AIRCRAFT--1.2%
Northrop 35,000 $1,584
AUTOMOTIVE--0.3%
Oshkosh Truck Class B 42,200 459
BANKS--6.4%
Ahmanson (H.F.) 46,400 969
Bank of Boston 118,800 3,162
Chemical Banking 58,100 2,034
Great Western Financial 66,800 1,286
PNC Bank 50,600 1,309
TOTAL BANKS 8,760
CHEMICALS--5.4%
First Mississippi 38,100 772
IMC Fertilizer Group* 108,000 4,805
Melamine Chemicals* 31,400 330
Nova 128,900 1,418
TOTAL CHEMICALS 7,325
COMMUNICATIONS EQUIPMENT--0.3%
Aydin* 32,700 335
CONSTRUCTION MATERIALS--1.4%
Lafarge 93,300 1,878
DRUGS--0.1%
Quadra Logic* 25,400 171
ELECTRICAL UTILITIES--0.7%
Unicom 41,700 928
FINANCIAL SERVICES--0.9%
Carr Realty 59,200 1,199
FOOD, BEVERAGE & TOBACCO--1.5%
Archer Daniels Midland 79,300 2,062
GAMES, TOYS AND CHILDREN'S VEHICLES--0.1%
Educational Insights* 18,000 119
MACHINERY--0.5%
Brown & Sharpe Manufacturing* 85,700 589
Ferrofluidics* 12,500 72
TOTAL MACHINERY 661
MARINE TRANSPORTATION--4.5%
Overseas Shipholding Group 132,800 2,888
Stolt-Nielsen S.A.* 151,900 3,266
TOTAL MARINE TRANSPORTATION 6,154
METALS & MINING--16.9%
Aluminum Company of America 94,100 $ 7,976
Cleveland-Cliffs 20,100 779
Cominco* 54,700 998
Cyprus AMAX Minerals 35,300 1,103
INCO 181,600 5,471
Nord Resources* 68,500 454
Potash of Saskatchewan 17,600 719
Reynolds Metals 77,500 4,388
USX--U.S. Steel Group 30,600 1,281
TOTAL METALS & MINING 23,169
OIL SERVICES--2.6%
Atwood Oceanics* 44,500 601
Halliburton 62,000 1,953
Sonat Offshore Drilling 33,500 666
Stolt Comex Seaway, S.A.* 33,000 330
TOTAL OIL SERVICES 3,550
OIL - DOMESTIC--13.5%
Amerada Hess 20,100 935
Dekalb Energy* 50,800 800
Diamond Shamrock 21,900 564
Louisiana Land And
Exploration 85,300 3,732
Maxus Energy* 84,900 382
Murphy Oil 27,700 1,205
USX--Marathon Group 267,400 4,746
Valero Energy 252,400 5,111
Wiser Oil 66,300 1,127
TOTAL OIL-DOMESTIC 18,602
OIL - INTERNATIONAL--3.5%
Texaco 80,400 4,824
PAPER & PAPER PRODUCTS--12.0%
Abitibi-Price* 145,700 2,204
Boise Cascade 70,900 2,092
Bowater 179,100 5,215
Champion International 104,100 4,034
Federal Paper Board 89,200 2,810
TOTAL PAPER & PAPER PRODUCTS 16,355
PRECIOUS METALS--5.9%
Agnico-Eagle Mines 55,700 801
Hemlo Gold Mines 231,600 2,663
Newmont Mining 102,099 4,595
TOTAL PRECIOUS METALS 8,059
RETAIL--0.9%
Dayton Hudson 15,500 1,186
SEMICONDUCTORS & RELATED DEVICES--0.2%
Parlex* 24,400 $ 207
WHOLESALE--0.4%
Super Rite* 37,000 490
TOTAL COMMON STOCKS (Cost $97,634) 108,077
MASTER NOTES--14.1%
Associates
4.813%, 10/04/94 (A) $ 5,360 5,360
Barclays
4.779%, 10/03/94 (A) 2,955 2,955
Goldman Sachs
4.950%, 10/04/94 (A) 5,719 5,719
Heller
4.935%, 10/04/94 (A) 5,160 5,160
TOTAL MASTER NOTES
(Cost $19,194) 19,194
REPURCHASE AGREEMENTS--7.7%
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $5,689,060,
(collateralized by U.S. Treasury
Note, 4.25%, par value $5,666,471,
due 1/31/95, market value
$5,812,010.) 5,687
J.P. Morgan 4.594%, dated 09/30/94,
matures 10/03/94, repurchase price
$4,871,677, (collateralized by U.S.
Treasury Interest Coupon Note, total
par value $26,358,697, due 2/15/15,
market value $4,967,209.) 4,870
TOTAL REPURCHASE AGREEMENTS
(Cost $10,557) 10,557
TOTAL INVESTMENTS--101.0%
(Cost $127,384) 137,828
OTHER ASSETS AND LIABILITIES--(1.0%)
Other assets and liabilities, net (1,319)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
7,445,378 outstanding
shares $111,287
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 423,818
outstanding shares 6,311
Portfolio
shares--Retail Class B
($.0001 par value--2
billion authorized)
based on 21,387
outstanding shares 365
Accumulated net
realized gain on
investments 8,102
Net unrealized
appreciation of
investments 10,444
TOTAL NET
ASSETS:--100.0% $136,509
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 17.30
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 17.30
MAXIMUM SALES CHARGE OF
4.50% (1) .82
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 18.12
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 17.29
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30,1994. The
date shown is the longer of the reset date or demand date.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
REGIONAL EQUITY FUND
DESCRIPTION SHARES/PAR (000) VALUE (000)
COMMON STOCKS--76.4%
APPAREL/TEXTILES--2.8%
G&K Services, Class A 125,850 $ 1,951
Raven Industries 54,100 1,014
TOTAL APPAREL/TEXTILES 2,965
AUTOPARTS--4.0%
Automotive Industries* 110,000 2,668
Deflecta-Shield* 101,100 834
Tower Automotive* 59,300 689
TOTAL AUTOPARTS 4,191
BANKING--9.9%
Community First Bankshares 91,300 1,438
Investors Bank 129,766 3,180
Metropolitan Financial 112,000 2,660
TCF Financial 78,000 3,071
TOTAL BANKING 10,349
CHEMICALS--1.9%
Fuller 30,000 900
Hawkins Chemical 157,464 1,102
TOTAL CHEMICALS 2,002
COMMUNICATIONS EQUIPMENT--2.1%
Communications Sysyems 200,000 2,000
Videolabs* 58,300 189
TOTAL COMMUNICATIONS EQUIPMENT 2,189
COMPUTERS & SERVICES--8.0%
Computer Network
Technology* 145,000 1,115
Control Data Systems* 358,100 2,395
Digi International* 182,200 2,596
Fourth Shift* 200,000 1,250
Hutchinson Technology* 37,100 1,020
TOTAL COMPUTERS & SERVICES 8,376
ELECTRONIC COMPONENTS--3.4%
BMC Industries 224,000 3,136
Daktronics* 62,700 423
TOTAL ELECTRONIC COMPONENTS 3,559
ENTERTAINMENT--0.7%
Lodgenet Entertainment* 90,000 765
FINANCIAL SERVICES--2.5%
General Growth Properties 127,000 2,572
FOOD & BEVERAGE--7.8%
Grist Mill* 200,000 $ 1,925
International Multifoods 164,000 2,685
Michael Foods 142,500 1,568
Minnesota Brewing* 147 662
Stokely USA* 139,900 1,329
TOTAL FOOD & BEVERAGE 8,169
MACHINERY--1.8%
Donaldson 87,000 1,936
MEDICAL PRODUCTS & SERVICES--7.8%
Angeion* 430,000 1,156
Biovascular* 313,300 1,493
CNS* 369,300 2,585
Lifecore Biomedical* 200,000 1,075
Medical Devices* 161,200 423
Minntech 93,300 1,446
TOTAL MEDICAL PRODUCTS & SERVICES 8,178
MISCELLANEOUS CONSUMER SERVICES--2.6%
Regis* 185,000 2,729
MISCELLANEOUS MANUFACTURING--2.5%
Recovery Engineering* 102,800 1,722
Shuffle Master* 66,700 884
TOTAL MISCELLANEOUS MANUFACTURING 2,606
MISCELLANEOUS TRANSPORTATION--0.9%
Arctco 50,175 953
PAPER & PAPER PRODUCTS--2.5%
Pentair 65,272 2,578
PRINTING & PUBLISHING--2.3%
IPI* 40,000 160
Merrill 120,000 2,280
TOTAL PRINTING & PUBLISHING 2,440
RETAIL--3.3%
Brauns Fashions* 80,000 280
Damark International* 149,600 1,814
Younkers* 70,000 1,330
TOTAL RETAIL 3,424
RETAIL - EATING PLACES--1.0%
Vicorp Restaurants* 64,300 1,077
RUBBER & PLASTIC--0.1%
Green Isle Environmental
Services* (C) 127,000 64
SEMI-CONDUCTORS & RELATED DEVICES--4.5%
FSI International* 74,500 $ 1,714
Sheldahl* 78,500 903
Zytec* 180,000 2,070
TOTAL SEMI-CONDUCTORS & RELATED DEVICES 4,687
SPECIALTY CONSTRUCTION--0.6%
Apogee Enterprises 35,000 578
TELEPHONES & TELECOMMUNICATION--3.4%
Norstan* 185,000 3,515
TOTAL COMMON STOCKS (Cost $70,464) 79,902
INVESTMENTS IN COMMON STOCK
OF AFFILIATES--10.1%
Aetrium* 248,000 2,789
Audio King* (B) 262,112 1,180
Canterbury Park Holdings* (B) 177,500 799
Navarre* (B) 152,200 628
Northwest Teleproductions* (B) 170,000 595
Rimage* (B) 216,000 1,188
Terrano* (B) 350,000 656
TSI (B) 310,000 2,712
TOTAL INVESTMENTS IN COMMON
STOCK OF AFFILIATES (Cost $10,082) 10,547
MASTER NOTES--13.0%
Associates Corporation of North America
4.813%, 10/04/94 (A) $ 3,029 3,029
Barclays Bank
4.779%, 10/03/94 (A) 3,210 3,210
Goldman Sachs
4.950%, 10/04/94 (A) 3,761 3,761
Heller Financial
4.935%, 10/04/94 (A) 3,578 3,578
TOTAL MASTER NOTES (Cost $13,578) 13,578
TOTAL INVESTMENTS--99.5%
(Cost $94,124) 104,027
OTHER ASSETS AND LIABILITIES--0.5%
Other assets and liabilities, net 548
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 7,668,481 outstanding shares $ 85,103
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
666,336 outstanding shares 7,204
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based on
14,788 outstanding shares 186
Accumulated net realized gain on
investments 2,179
Net unrealized appreciation
of investments 9,903
TOTAL NET ASSETS--100.0% $104,575
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 12.52
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 12.52
MAXIMUM SALES CHARGE OF 4.50% (1) .59
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 13.11
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $12.50
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
(B) Investments representing five percent or more of the outstanding voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the fiscal year ended
September 30, 1994. The total cost of purchases of Aetrium, Audio King,
Canterbury Holdings, Navarre, Northwest Teleproductions, Rimage, Terrano,
and TSI were $2,559,698, $801,072, $710,000, $856,125, $623,125,
$1,612,585, $689,625, and $2,229,419 respectively. With the exception of
$28,258 in dividend income for TSI, there were neither sales nor dividend
income during the annual period. Change in unrealized appreciation since
9/30/93 in affiliated securities is $464,722.
(C) Security sold within terms of a private placement memorandum, exempt from
registration under Section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited
investors". These securities have been determined to be liquid under
guidelines established by the Board of Directors.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
EMERGING GROWTH FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--78.0%
AUTOMOTIVE--1.2%
Deflecta-Shield* 9,900 $ 82
BEAUTY PRODUCTS--1.4%
Drypers* 8,000 96
BROADCASTING, NEWSPAPERS & ADVERTISING--3.8%
Bell Cablemedia ADR* 4,500 116
National Wireless
Holdings* 3,800 31
Qualcomm* 4,500 114
TOTAL BROADCASTING,
NEWSPAPERS & ADVERTISING 261
CHEMICALS--0.9%
Fuller (H.B.) 2,100 63
COMMUNICATIONS EQUIPMENT--1.3%
Tellabs* 2,100 89
DRUGS--4.8%
Chiron* 500 33
Genzyme* 2,300 79
Idexx Labs* 4,800 142
Perrigo* 6,100 82
TOTAL DRUGS 336
FINANCIAL SERVICES--7.3%
Advanta Class A 1,700 51
Advanta Class B 500 15
Concord Holding* 7,600 63
Fiserv* 5,600 120
SPS Transaction Services* 1,900 99
The Bisys Group* 7,600 161
TOTAL FINANCIAL SERVICES 509
FOOD, BEVERAGE & TOBACCO--1.7%
Cott 4,900 65
John B. Sanfilippo & Son 6,100 55
TOTAL FOOD, BEVERAGE & TOBACCO 120
HOUSEHOLD PRODUCTS--3.0%
Coleman* 4,000 140
Recoton* 4,350 71
TOTAL HOUSEHOLD PRODUCTS 211
INSURANCE--2.8%
Capital Guaranty 3,200 49
Partnerre Holdings 3,200 70
Vesta Insurance Group 2,800 74
TOTAL INSURANCE 193
MARINE TRANSPORTATION--1.0%
Royal Carribean Cruises 2,800 $ 73
MEASURING DEVICES--0.7%
Quickturn Design Systems* 5,700 51
MEDICAL PRODUCTS & SERVICES--11.5%
American Healthcorp* 8,000 61
Cerner* 1,300 53
HBO 3,500 119
Healthsource* 3,500 124
Quorum Health Group* 8,000 152
Target Therapeutics* 4,400 129
Vencor* 3,500 160
TOTAL MEDICAL PRODUCTS & SERVICES 798
METALWORKING MACHINERY & EQUIPMENT--3.2%
Greenfield Industries 4,600 111
Shaw Group* 9,000 110
TOTAL METALWORKING MACHINERY
& EQUIPMENT 221
MISCELLANEOUS BUSINESS SERVICES--3.3%
Keane* 4,000 89
Landmark Graphics* 6,000 141
TOTAL MISCELLANEOUS BUSINESS SERVICES 230
PETROLEUM & FUEL PRODUCTS--3.1%
Benton Oil And Gas* 17,000 123
Coho Energy Resources* 17,000 90
TOTAL PETROLEUM & FUEL PRODUCTS 213
PRINTING & PUBLISHING--0.9%
Thomas Nelson 3,300 61
RAILROADS--1.1%
Johnstown America Industries* 2,900 76
RETAIL--4.4%
Department 56* 1,500 59
Gander Mountain Incorporation 5,900 75
Orchard Suppply Hardware Stores* 5,500 51
West Marine* 5,300 119
TOTAL RETAIL 304
RETAIL - EATING PLACES--3.4%
Buffets* 3,700 58
Fresh Choice* 4,300 86
Hometown Buffet 9,000 90
TOTAL RETAIL-EATING PLACES 234
SEMI-CONDUCTORS/INSTRUMENTS--1.1%
Chipcom* 1,500 80
SERVICES - PREPACKAGED SOFTWARE--6.8%
Network Peripherals* 13,100 $185
Peoplesoft* 2,900 140
Platinum Software* 4,000 49
Powersoft* 1,900 102
TOTAL SERVICES-PREPACKAGED SOFTWARE 476
SPECIALTY CONSTRUCTION--0.5%
Insituform Mid-America Class A 3,900 37
SPECIALTY MACHINERY--2.5%
York International 4,200 175
TELEPHONES & TELECOMMUNICATION--5.4%
A+ Communications* 4,800 63
American Paging* 3,800 33
Compania De Telef De Chile ADR 1,100 97
International Cabletel* 5,100 163
Nextel Communications Class A* 1,000 21
TOTAL TELEPHONES & TELECOMMUNICATION 377
TRUCKING--0.9%
Fritz Companies* 1,800 64
TOTAL COMMON STOCKS (Cost $5,186) 5,430
PREFERRED STOCKS--0.7%
SERVICES - PREPACKAGED SOFTWARE--0.7%
Network Imaging Pfd 2,300 48
TOTAL PREFERRED STOCKS (Cost $53) 48
REPURCHASE AGREEMENTS--17.8%
J.P. Morgan, 4.594%, dated 09/30/94,
matures 10/03/94, repurchase price
$680,821 (collateralized by a U.S.
Treasury Interest Coupon Note, par
value $3,683,531, maturing 02/15/15,
market value $694,126) 680
Merrill Lynch 4.652%, dated
09/30/94, matures 10/03/94,
repurchase price $556,721
(collateralized by a U.S. Treasury
Note, par value $574,856, interest
rate 4.25%, maturing 01/31/95,
market value $567,746) 557
TOTAL REPURCHASE AGREEMENTS
(Cost $1,237) 1,237
TOTAL INVESTMENTS--96.5% (Cost $6,476) $6,715
* Non-income producing security
(A) Variable rate security with Demand Features--the rate reported in the
Schedule of Investments is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
ADR--American Depository Receipt
TECHNOLOGY FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--91.3%
COMMUNICATIONS EQUIPMENT--21.3%
Broadband Technologies* 6,600 $ 117
Cascade Communications* 500 24
DSC Communications* 9,100 258
General DataComm Industries* 5,400 153
General Instrument* 7,400 211
Newbridge Networks* 4,300 138
Northern Telecom 3,600 125
Qualcomm* 5,500 139
Tellabs* 5,500 234
TOTAL COMMUNICATIONS EQUIPMENT 1,399
COMPUTERS & SERVICES--15.4%
Adaptec* 4,100 78
C-Cube Microsystems* 300 6
Chipcom* 2,000 107
Cisco Systems* 5,900 162
Compaq Computer* 7,400 241
Convex Computer* 18,200 146
Pinnacle Micro* 4,000 52
S3* 11,000 140
Silicon Graphics* 3,000 77
TOTAL COMPUTERS & SERVICES 1,009
SEMI-CONDUCTORS/INSTRUMENTS--44.5%
Applied Materials* 3,400 159
Dataware Technologies* 3,100 41
Fourth Shift* 12,300 77
FSI International* 4,100 94
FTP Software* 5,400 129
GaSonics International* 1,700 30
Informix* 12,100 334
Intel 1,300 80
Lam Research* 3,200 129
LSI Logic* 3,600 135
Megatest* 2,000 36
Micron Technology 2,700 93
Network Peripherals* 10,400 147
Novellus Systems* 1,800 85
Oracle Systems* 6,200 267
Parametric Technology* 5,500 183
ParcPlace Systems* 3,400 72
Peoplesoft* 1,400 68
Platinum Software* 4,600 $ 56
Powersoft* 3,700 199
Quickturn Design Systems* 9,100 82
Softdesk* 1,000 18
Solectron* 3,700 98
Sonic Solution* 2,700 32
Symantec* 10,100 151
Synopsys* 2,700 122
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 2,917
SERVICES - PREPACKAGED SOFTWARE--10.1%
Business Objects S.A.(ADR)* 450 13
CFI Proservices* 7,300 108
Legent* 4,800 127
Microsoft* 4,500 252
Novell* 10,900 161
TOTAL SERVICES-PREPACKAGED SOFTWARE 661
TOTAL COMMON STOCKS (Cost $5,298) 5,986
PREFERRED STOCKS--4.9%
COMMUNICATIONS EQUIPMENT--4.1%
Nokia ADR 4,600 270
SERVICES - COMPUTER INTEGRATED SYSTEMS
DESIGN--0.8%
Network Imaging, Series A 2,400 50
TOTAL PREFERRED STOCKS (Cost $277) 320
REPURCHASE AGREEMENTS--3.9%
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $257,957
(collateralized by a U.S. Treasury
Note, total par value $262,122,
interest rate 4.25%, matures
01/31/95, market value $263,068) 258
TOTAL REPURCHASE AGREEMENTS (Cost $258) 258
TOTAL INVESTMENTS--100.1%
(Cost $5,833) 6,564
OTHER ASSETS AND LIABILITIES--(0.1%)
Other assets and liabilities, net (10)
NET ASSETS
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
580,310 outstanding shares $5,628
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 5,513
outstanding shares 53
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 160
outstanding shares 2
Accumulated net investment loss (3)
Accumulated net realized gain on investments 143
Net unrealized appreciation of investments 731
TOTAL NET ASSETS:--100.0% $6,554
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $11.19
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS A $11.19
MAXIMUM SALES CHARGE OF 4.50% (1) .53
OFFERING PRICE PER SHARE--RETAIL CLASS A $11.72
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $11.17
* Non-income producing security
ADR--American Depository Receipt
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
INTERNATIONAL FUND
DESCRIPTION SHARES VALUE (000)
FOREIGN STOCKS--83.1%
ARGENTINA--2.0%
Argentina Telecommunications
ADR 4,000 $ 267
Banco Frances Rio Plata ADR* 2,300 69
Cementera Argentina* 46,901 376
IRSA "B"* 23,400 78
Quilmes Industrial 7,000 164
TOTAL ARGENTINA 954
CANADA--0.8%
Archer Resources* 8,200 108
Chauvco Resources* 4,700 58
Euro-Nevada Mining 3,000 92
Franco-Nevada Mining 2,000 130
TOTAL CANADA 388
CHILE--0.3%
Banco O'Higgins ADR* 6,500 133
COLUMBIA--0.5%
Banco Ganadero ADR* 2,000 52
Cementos Paz Del Rio GDR* 3,800 95
Corporacion Financiera Valle
GDS 4,000 88
TOTAL COLUMBIA 235
FINLAND--2.2%
Nokia 9,000 1,045
FRANCE--0.4%
Cie Bancaire 1,200 113
Lafarge Coppee 1,200 94
TOTAL FRANCE 207
GERMANY--2.2%
Bayer 775 175
Mannesmann 1,350 336
Veba 1,720 570
TOTAL GERMANY 1,081
HONG KONG--9.8%
Cheung Kong Holdings 57,000 277
Citic Pacific 176,000 544
First Pacific 916,000 670
Hong Kong Aircraft Engineering 40,800 189
Hong Kong Land Holdings 50,000 124
Hong Kong Telecommunications 307,400 615
Hopewell Holdings 203,000 190
HSBC Holdings 18,200 203
Hutchison Whampoa 60,000 283
Johnson Electric Holdings 20,000 56
Sun Hung Kai Properties 68,000 $ 506
Swire Pacific "A" 11,000 86
Television Broadcasts 111,000 516
Wharf Holdings 104,000 419
Wheelock 30,000 66
TOTAL HONG KONG 4,744
INDIA--0.8%
I.T.C. ADR* 12,000 156
Reliance Industries GDR 9,000 216
TOTAL INDIA 372
ISRAEL--0.1%
ECI Telecommunications 3,600 63
ITALY--3.7%
Assicurazioni Generali 8,910 228
Fiat* 84,000 359
Instituto Mobiliare 22,000 152
Mediobanca 10,600 95
Montedison* 216,000 189
Olivetti Group* 220,000 295
Stet-Soc Fin Telefonica ADR 80,000 248
Telecom Italia 85,000 240
TOTAL ITALY 1,806
JAPAN--28.6%
Alpine Electronics 6,000 126
Alps Electric* 8,000 104
Amway Japan ADR 3,000 48
Bridgestone 30,000 470
Canon 17,000 299
Dai Nippon Printing 12,000 217
Daiei 33,000 533
Daini Denden 106 926
Daiwa Securities 31,000 454
Fanuc 4,000 187
Hirose Electric 4,000 250
Hitachi 18,000 174
Honda Motor 9,000 150
Ito Yokado 13,000 694
Jusco 24,000 519
KOA 8,000 129
Komatsu 57,000 519
Kurita Water Industries 3,000 80
Kyocera 6,000 429
Marui 9,000 156
Matsushita Electric 21,000 335
Minebea 38,000 320
Misawa Homes 10,000 95
Mitsubishi Bank 5,000 124
Mitsubishi Electric 17,000 $ 120
Mitsubishi Heavy Industries 30,000 233
Mitsumi Electric 9,000 119
Mr. Max 2,800 76
Murata Manufacturing 11,000 425
NEC 64,000 769
Nippon Telegraph & Telephone 24 213
Nippondenso 4,000 81
Nissan Motors 27,000 221
Nomura Securities 28,000 580
Senshukai 7,000 229
Sharp 42,000 746
Sony 12,000 698
Sumitomo Chemical 34,000 193
Sumitomo Electric 8,000 118
Suzuki Motor 27,000 327
Takara Standard 10,000 121
Tokyo Electronics 9,000 287
Toppan Printing 5,000 73
Toshiba 50,000 376
Toyo Communications Equipment 3,000 94
Toyota Motor 19,000 389
TOTAL JAPAN 13,826
KOREA--1.6%
Korea Fund 13,000 340
Samsung Electric New GDS* 174 12
Samsung Electric Old GDS* 6,200 411
TOTAL KOREA 763
MALAYSIA--6.3%
Aokam Perdana 21,000 184
Aokam Perdana "A"* 8,000 69
Arab-Malaysian Merchant Bank* 58,000 633
Genting 11,000 99
Leader Universal Holdings 55,000 315
Malayan Banking 38,000 254
Malaysian Helicopter 34,400 107
Resort World 94,000 594
Sime Darby Malaysia 66,000 191
Technology Resources* 86,000 352
Telekom Malaysia 30,000 235
TOTAL MALAYSIA 3,033
MEXICO--9.5%
Apasco 10,000 97
Bufete Industrial ADR 4,500 185
Cemex "A" 33,750 303
Cifra 117,000 345
Empresas ICA Sociedad
Controladora ADR 6,000 194
Grupo Carso ADR* 18,600 $ 423
Grupo Financiero Banamex "C" 56,000 389
Grupo Financiero Inbursa "C"* 25,000 107
Grupo Industrial Durango ADR* 1,900 45
Grupo Iusacell ADS* 1,610 48
Grupo Posadas "A"* 177,000 198
Grupo Sidek ADR* 60,000 540
Grupo Situr ADR "B"* 36,000 124
Grupo Synkro ADR* 100,000 163
Grupo Televisa GDR 6,800 394
Grupo Tribasa ADR* 1,900 70
Kimberly Clark "A" 11,000 230
San Luis 6,000 67
Servicios Financieros Quadrum
ADR* 7,700 125
Tolmex 38,000 578
TOTAL MEXICO 4,625
NETHERLANDS--0.3%
Polygram 3,700 160
NORWAY--0.6%
Petroleum Geo-Services ADR* 16,100 312
PERU--0.3%
Banco Wiese* 6,800 165
PHILIPPINES--0.6%
San Miguel "B" 60,000 286
SINGAPORE--3.2%
Cerebos Pacific 55,000 299
City Developments 28,600 155
DBS Land 100,000 313
Singapore Press "F" 5,000 88
Straits Steamship Land 108,000 356
United Overseas Bank "F" 33,200 334
TOTAL SINGAPORE 1,545
SWEDEN--3.3%
Asea "B" 6,800 481
Autoliv* 3,000 90
Electrolux "B" 2,900 137
Ericsson Telephone ADR 17,000 914
TOTAL SWEDEN 1,622
SWITZERLAND--1.8%
Brown Boveri & Cie Bearer 520 448
Roche Holdings 60 270
Union Bank of Switzerland Bearer 180 172
TOTAL SWITZERLAND 890
TAIWAN--0.2%
Taiwan Fund 3,000 $ 92
THAILAND--1.8%
Advanced Info Service "F" 12,000 191
Advanced Info Service Rights* 24,000 371
Land and House "F" 16,000 318
TOTAL THAILAND 880
UNITED KINGDOM--2.0%
Barclays Bank 14,000 126
Next* 66,400 250
Reuters Holdings 49,000 367
Takare 20,000 66
Vodafone Group 51,000 158
TOTAL UNITED KINGDOM 967
VENEZUELA--0.2%
Industrias Mavesa ADS 11,000 73
TOTAL FOREIGN STOCKS
(Cost $38,958) 40,267
REPURCHASE AGREEMENT--18.3%
Merrill Lynch 4.5625%, dated
09/30/94, matures 10/03/94,
repurchase price $8,854,000
(collateralized by a U.S. Treasury
Note, total par value $21,145,000,
interest rate 4.25%, maturity date
01/31/95, total market value:
$21,072,250) 8,854
TOTAL REPURCHASE AGREEMENT
(Cost $8,854) 8,854
TOTAL INVESTMENTS--101.4%
(Cost $47,812) 49,121
OTHER ASSETS AND LIABILITIES--(1.4%)
Other assets and liabilities, net (672)
NET ASSETS
Portfolio shares Institutional Class ($.0001 par
value--2 billion authorized) based on 4,694,760
outstanding shares 47,350
Portfolio shares Retail Class A ($.0001 par
value--2 billion authorized) based on 45,395
outstanding shares 457
Portfolio shares Retail Class B ($.0001 par
value--2 billion authorized) based on 2,128
outstanding shares 22
Accumulated net investment loss (415)
Accumulated net
realized loss on
investments and
foreign currency
transactions $ (234)
Net unrealized
depreciation on
forward foreign
currency contracts,
foreign currency and
translation of other
assets and
liabilities in
foreign currency (40)
Net unrealized
appreciation of
investments 1,309
TOTAL NET
ASSETS:--100.0% $48,449
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 10.22
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE --RETAIL CLASS A $ 10.21
MAXIMUM SALES CHARGE
OF 4.50% (1) .48
OFFERING PRICE PER
SHARE -- RETAIL CLASS A $ 10.69
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 10.21
* Non-income producing security
ADR--American Depository Receipt
ADS--American Depository Shares
GDR--Global Depository Receipt
GDS--Global Depository Shares
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
Statements of Assets and Liabilities (000)----SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
EQUITY DIVERSIFIED
INCOME GROWTH
FUND FUND
ASSETS:
Investment securities, at value
(cost $19,189, and $31,932, respectively) $ 19,122 $ 32,215
RECEIVABLES:
Accrued income 113 --
Securities sold -- 302
Capital shares sold 973 1,591
Other assets 55 133
TOTAL ASSETS 20,263 34,241
LIABILITIES:
PAYABLES:
Securities purchased 891 454
Other liabilities 30 --
TOTAL LIABILITIES 921 454
NET ASSETS:
Portfolio Shares--Institutional Class
(No par value--unlimited authorization)
based on 1,768,328 & 3,502,094 outstanding shares,
respectively 17,862 34,419
Portfolio Shares--Retail Class A
(No par value--unlimited authorization)
based on 187,297 & 208,967 outstanding shares,
respectively 1,982 2,133
Portfolio Shares--Retail Class B
(No par value--unlimited authorization)
based on 101 & 1,370 outstanding shares,
respectively 1 13
Undistributed net investment income 30 20
Accumulated net realized loss on investments (466) (3,081)
Net unrealized appreciation (depreciation) of investments (67) 283
TOTAL NET ASSETS $ 19,342 $ 33,787
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.89 $ 9.10
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.89 $ 9.09
MAXIMUM SALES CHARGE OF 4.50% (1)
AND 4.50% (1), RESPECTIVELY .47 .43
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.36 $ 9.52
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 9.88 $ 9.09
</TABLE>
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50% and 4.50%, respectively.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF ASSETS AND LIABILITIES (000)----SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
COLORADO
INTERMEDIATE EMERGING
TAX FREE GROWTH
FUND FUND
ASSETS:
Investment securities, at value
(cost $8,173, and $6,476 respectively) $ 8,141 $6,715
RECEIVABLES:
Accrued income 129 --
Securities sold -- 33
Capital shares sold 458 351
Other assets 27 23
TOTAL ASSETS 8,755 7,122
LIABILITIES:
PAYABLES:
Securities purchased 745 136
Accrued expenses 33 28
Other liabilities 3 --
TOTAL LIABILITIES 781 164
NET ASSETS:
Portfolio Shares--Institutional Class
($.0001 par value--2 billion authorized) based
on 716,975 & 648,578 outstanding shares, respectively 7,306 6,548
Portfolio Shares--Retail Class A
($.0001 par value--2 billion authorized) based
on 68,223 & 8,552 outstanding shares, respectively 697 86
Portfolio Shares--Retail Class B
($.001 par value--2 billion authorized) based
on 0 & 1,730 outstanding shares, respectively -- 18
Undistributed net investment income 2 1
Accumulated net realized gain on investments 1 66
Net unrealized appreciation (depreciation) of investments (32) 239
TOTAL NET ASSETS $ 7,974 $6,958
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $ 10.16 $10.56
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE--RETAIL CLASS A $ 10.15 $10.57
MAXIMUM SALES CHARGE OF 3.00% (1) AND 4.50% (1), RESPECTIVELY .31 .50
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.46 $11.07
NET ASSET VALUE AND OFFERING PRICE PER SHARE--RETAIL CLASS B (2) -- $10.55
</TABLE>
(1)The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.00% and 4.50%, respectively.
(2)Retail Class B has a contingent deferred sales charge. For a description
of a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS (000)
For the period ended September 30, 1994
<TABLE>
<CAPTION>
LIMITED INTERMEDIATE FIXED MANAGED
TERM TERM INCOME INCOME
INCOME FUND INCOME FUND FUND FUND(1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 4,695 $ 3,355 $ 3,740 $ 3,690
Dividends -- -- -- --
TOTAL INVESTMENT INCOME 4,695 3,355 3,740 3,690
EXPENSES:
Investment advisory fees 673 445 338 371
Distribution fees--Retail Class A 120 64 62 3
Administrator fees 192 127 125 114
Transfer agent fees 22 21 16 16
Amortization of organizational costs 2 2 -- 8
Custodian fees 6 5 5 5
Directors' fees 3 2 2 1
Registration fees 18 19 22 19
Professional fees 25 20 21 42
Printing 16 14 10 44
Other 9 5 7 8
TOTAL EXPENSES 1,086 724 608 631
LESS: EXPENSES WAIVED OR ABSORBED (509) (329) (213) (276)
TOTAL NET EXPENSES 577 395 395 355
INVESTMENT INCOME--NET 4,118 2,960 3,345 3,335
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS--NET:
Net realized gain (loss) on investments 29 (863) (188) (1,434)
Net change in unrealized appreciation (depreciation) of
investments (2,149) (2,753) (5,201) (261)
NET GAIN (LOSS) ON INVESTMENTS (2,120) (3,616) (5,389) (1,695)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,998 $ (656) $(2,044) $ 1,640
</TABLE>
(table continued)
<TABLE>
<CAPTION>
MINNESOTA
LIMITED COLORADO INSURED
INTERMEDIATE MORTGAGE TERM TAX INTERMEDIATE INTERMEDIATE INTERMEDIATE
GOVERNMENT SECURITIES FREE INCOME TAX FREE TAX FREE TAX FREE
BOND FUND FUND FUND(1) FUND FUND(2) FUND(3)
<S> <C> <C> <C> <C> <C>
$354 $ 1,977 $ 525 $ 171 $ 48 $ 323
-- -- -- -- -- --
354 1,977 525 171 48 323
37 225 106 19 6 43
7 29 -- 5 1 1
50 64 63 50 24 29
13 17 15 11 8 9
-- 2 8 -- 3 3
2 10 2 1 -- 2
-- 1 -- -- -- --
4 5 16 2 1 8
1 9 16 1 -- 3
-- 6 17 -- 1 1
-- 2 7 -- -- --
114 370 250 89 44 99
(85) (173) (121) (70) (38) (58)
29 197 129 19 6 41
325 1,780 396 152 42 282
(78) (62) (13) (38) 1 (12)
(344) (1,966) (115) (178) (32) (252)
(422) (2,028) (128) (216) (31) (264)
$(97) $ (248) $ 268 $ (64) $ 11 $ 18
</TABLE>
(1) Period from December 1, 1993 to September 30, 1994 for Managed Income Fund
and Limited Term Tax Free Fund. On April 28, 1994, the Board of Directors
of FAMF approved a change in FAMF's fiscal year end from November 30 to
September 30, effective September 30, 1994.
(2) The Colorado Intermediate Tax Free Fund commenced operations on April 4,
1994.
(3) The Minnesota Insured Intermediate Tax Free Fund commenced operations
February 28, 1994.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS (000)
For the period ended September 30, 1994
<TABLE>
<CAPTION>
ASSET EQUITY EQUITY
ALLOCATION BALANCED INDEX INCOME
FUND FUND FUND FUND(1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 608 $ 3,364 $ 96 $ 904
Dividends 1,166 1,787 4,235 223
Less: Foreign taxes withheld -- -- -- --
Total investment income 1,774 5,151 4,331 1,127
EXPENSES:
Investment advisory fees 374 888 1,076 141
Distribution fees--Retail Class A 52 126 135 1
Administrator fees 107 254 308 64
Transfer agent fees 20 26 26 17
Amortization of organizational costs 2 3 4 8
Custodian fees 36 15 24 2
Directors' fees 2 4 5 1
Registration fees 12 36 29 16
Professional fees 15 39 43 14
Printing 9 23 28 19
Other 3 12 12 9
TOTAL EXPENSES 632 1,426 1,690 292
LESS: EXPENSES WAIVED OR ABSORBED (231) (467) (1,152) (124)
TOTAL NET EXPENSES 401 959 538 168
INVESTMENT INCOME (LOSS)--NET 1,373 4,192 3,793 959
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS--NET:
Net realized gain (loss) on investments 1,042 2,435 1,237 (442)
Net realized loss on forward foreign currency contracts
and foreign currency transactions -- -- -- --
Net change in unrealized appreciation (depreciation) of investments (1,588) (3,010) 56 334
Net change in unrealized depreciation on forward foreign currency contracts,
foreign currency and translation of other assets and liabilities in foreign
currency -- -- -- --
NET GAIN (LOSS) ON INVESTMENTS (546) (575) 1,293 (108)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 827 $ 3,617 $ 5,086 $ 851
</TABLE>
(table continued)
<TABLE>
<CAPTION>
DIVERSIFIED SPECIAL REGIONAL EMERGING
GROWTH STOCK EQUITY EQUITY GROWTH TECHNOLOGY INTERNATIONAL
FUND(1) FUND FUND FUND FUND(2) FUND(2) FUND(2)
<S> <C> <C> <C> <C> <C> <C>
$43 $ 454 $ 982 $ 595 $ 15 $ 8 $ 95
466 3,297 1,885 684 5 2 159
-- -- -- -- -- -- (20)
509 3,751 2,867 1,279 20 10 234
169 926 738 579 14 11 188
1 125 92 74 -- -- --
63 273 212 166 25 25 31
18 24 23 20 8 8 10
8 -- -- 4 3 3 3
2 14 8 8 1 -- 38
1 3 3 3 -- -- --
29 32 34 28 2 2 17
21 40 32 27 1 1 7
19 20 19 15 -- -- 5
6 12 8 6 -- -- 9
337 1,469 1,169 930 54 50 308
(132) (442) (326) (262) (38) (37) (45)
205 1,027 843 668 16 13 263
304 2,724 2,024 611 4 (3) (29)
(3,037) 7,831 8,668 2,221 66 143 (177)
-- -- -- -- -- -- (443)
1,902 319 7,538 2,652 239 731 1,309
-- -- -- -- -- -- (40)
(1,135) 8,150 16,206 4,873 305 874 649
$(831) $10,874 $18,230 $5,484 $309 $871 $ 620
</TABLE>
(1) Period from December 1, 1993 to September 30, 1994 for Equity Income Fund
and Diversified Growth Fund. On April 28, 1994, the Board of Directors of
FAMF approved a change in FAMF's fiscal year end from November 30 to
September 30, effective September 30, 1994.
(2) The Emerging Growth, Technology and International Funds commenced
operations April 4, 1994.
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
LIMITED TERM TERM INCOME INCOME MANAGED
INCOME FUND FUND FUND INCOME FUND
10/1/93 12/14/92(4) 10/1/93 12/14/92(4) 10/1/93 10/1/92 12/1/93 11/17/92(6)
to to to to to to to to
9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94(5)11/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income--net $ 4,118 $ 3,597 $ 2,960 $ 2,254 $ 3,345 $ 2,131 $ 3,335 $ 3,789
Net realized gain (loss) on investments 29 (6) (863) 1,071 (188) 550 (1,434) (446)
Net change in unrealized appreciation
(depreciation) of investments (2,149) 730 (2,753) 594 (5,201) 1,723 (261) (1,393)
Net increase in net assets resulting from
operations 1,998 4,321 (656) 3,919 (2,044) 4,404 1,640 1,950
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (2,182) -- (1,900) -- (2,150) -- (519) --
Retail class A (1,862) (3,665) (1,064) (2,249) (1,197) (2,123) (2,859) (3,738)
Retail class B -- -- -- -- -- -- -- --
Net realized gain on investments:
Institutional class -- -- -- -- -- -- -- --
Retail class A -- -- -- (497) (51) (489) -- --
Retail class B -- -- -- -- -- -- -- --
Distributions in excess of realized
capital gains:
Institutional class -- -- -- -- -- -- -- --
Retail class A -- -- (685) -- (523) -- -- --
Retail class B -- -- -- -- -- -- -- --
TOTAL DISTRIBUTIONS (4,044) (3,665) (3,649) (2,746) (3,921) (2,612) (3,378) (3,738)
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Transfer from retail class A 82,491 -- 59,843 -- 44,936 -- 48,679 --
Proceeds from sales 16,209 -- 25,019 -- 58,825 -- 3,367 --
Reinvestment of distributions 2,151 -- 1,829 -- 1,749 -- 364 --
Payments for redemptions (29,445) -- (15,273) -- (12,069) -- (4,270) --
Increase in net assets from Institutional
class transactions 71,406 -- 71,418 -- 93,441 -- 48,140 --
Retail class A:
Proceeds from sales 28,721 179,835 4,929 85,136 12,649 58,147 8,648 87,518
Reinvestment of distributions 1,645 3,519 1,744 2,740 1,635 2,303 2,256 2,847
Payments for redemptions (59,260) (62,210) (9,581) (21,758) (12,211) (14,286) (31,310) (14,929)
Transfer to institutional class (82,491) -- (59,843) -- (44,936) -- (48,679) --
Increase (decrease) in net assets from
Retail class A transactions (111,385) 121,144 (62,751) 66,118 (42,863) 46,164 (69,085) 75,436
Retail class B:
Proceeds from sales 1 -- -- -- 116 -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Increase (decrease) in net assets from
Retail class B transactions 1 -- -- -- 116 -- -- --
Increase (decrease) in net assets from
capital share transactions (39,978) 121,144 8,667 66,118 50,694 46,164 (20,945) 75,436
Total increase (decrease) in net assets (42,024) 121,800 4,362 67,291 44,729 47,956 (22,683) 73,648
NET ASSETS AT BEGINNING OF PERIOD 121,800 -- 67,291 -- 53,601 5,645 73,748 100
NET ASSETS AT END OF PERIOD (2)(3) $ 79,776 $121,800 $ 71,653 $ 67,291 $ 98,330 $ 53,601 $51,065 $ 73,748
(1)Capital share transactions:
Institutional class:
Transfer from retail class A 8,255 -- 5,960 -- 4,120 -- 4,793 --
Proceeds from sales 1,636 -- 2,597 -- 5,555 -- 352 --
Reinvestment of distributions 218 -- 188 -- 165 -- 38 --
Payments for redemptions (2,975) -- (1,581) -- (1,140) -- (447) --
Total Institutional class transactions 7,134 -- 7,164 -- 8,700 -- 4,736 --
Retail class A:
Proceeds from sales 2,860 17,966 506 8,466 1,128 5,279 892 8,749
Reinvestment of distributions 164 352 174 270 147 207 234 288
Payments for redemptions (5,916) (6,206) (967) (2,153) (1,092) (1,282) (3,245) (1,504)
Transfer to institutional class (8,255) -- (5,960) -- (4,120) -- (4,793) --
Total Retail class A transactions (11,147) 12,112 (6,247) 6,583 (3,937) 4,204 (6,912) 7,533
Retail class B:
Proceeds from sales -- -- -- -- 11 -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Total Retail class B transactions -- -- -- -- 11 -- -- --
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS (4,013) 12,112 917 6,583 4,774 4,204 (2,176) 7,533
</TABLE>
(table continued)
<TABLE>
<CAPTION>
MINNESOTA
COLORADO INSURED
INTERMEDIATE INTERMEDIATE INTERMEDIATE
GOVERNMENT BOND MORTGAGE LIMITED TERM INTERMEDIATE TAX FREE TAX FREE
FUND SECURITIES FUND TAX FREE INCOME FUND TAX FREE FUND FUND FUND
10/1/93 10/1/92 10/1/93 12/14/92(4) 12/1/93 2/19/93(8) 10/1/93 10/1/92 4/4/94(7) 2/28/94(9)
to to to to to to to to to to
9/30/94 9/30/93 9/30/94 9/30/93 9/30/94(5) 11/30/93 9/30/94 9/30/93 9/30/94 9/30/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$325 $ 75 $ 1,780 $ 1,015 $ 396 $ 276 $ 152 $ 71 $ 42 $ 282
(78) 18 (62) 10 (13) (2) (38) 18 1 (12)
(344) 2 (1,966) 729 (115) 36 (178) 51 (32) (252)
(97) 95 (248) 1,754 268 310 (64) 140 11 18
(217) -- (1,208) -- (93) -- (78) -- (30) (254)
(109) (75) (572) (1,015) (315) (264) (74) (71) (10) (28)
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- (10) -- -- -- -- -- -- --
-- (38) -- -- -- -- -- (4) -- --
-- -- -- -- -- -- -- -- -- --
(18) -- -- -- -- -- (21) -- -- --
-- -- -- -- -- -- -- -- -- --
(344) (113) (1,790) (1,015) (408) (264) (173) (75) (40) (282)
2,156 -- 32,357 -- 15,896 -- 2,109 -- -- --
27,456 -- 4,386 -- 1,082 -- 6,147 -- 7,465 21,192
81 -- 1,182 -- 45 -- 40 -- 10 41
(1,614) -- (8,219) -- (582) -- (2,027) -- (169) (709)
28,079 -- 29,706 -- 16,441 -- 6,269 -- 7,306 20,524
1,156 4,030 3,906 30,412 3,189 20,877 802 2,478 691 1,606
117 65 582 1,014 152 84 83 62 6 28
(718) (950) (1,640) (1,650) (6,128) (1,677) (481) (361) -- (114)
(2,156) -- (32,357) -- (15,896) -- (2,109) -- -- --
(1,601) 3,145 (29,509) 29,776 (18,683) 19,284 (1,705) 2,179 697 1,520
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
26,478 3,145 197 29,776 (2,242) 19,284 4,564 2,179 8,003 22,044
26,037 3,127 (1,841) 30,515 (2,382) 19,330 4,327 2,244 7,974 21,780
3,716 589 30,515 -- 19,330 -- 2,969 725 -- --
$29,753 $3,716 $ 28,674 $ 30,515 $ 16,948 $19,330 $ 7,296 $ 2,969 $7,974 $21,780
229 -- 3,201 -- 1,589 -- 199 -- -- --
3,034 -- 438 -- 108 -- 592 -- 732 2,183
9 -- 120 -- 4 -- 4 -- 1 4
(177) -- (833) -- (58) -- (195) -- (16) (73)
3,094 -- 2,926 -- 1,643 -- 600 -- 717 2,114
123 426 379 3,012 319 2,087 74 231 68 166
13 7 57 99 15 8 8 5 -- 3
(78) (100) (159) (160) (612) (167) (45) (33) -- (12)
(229) -- (3,201) -- (1,589) -- (199) -- -- --
(171) 333 (2,924) 2,951 (1,867) 1,928 (162) 203 68 157
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
2,924 333 2 2,951 (224) 1,928 438 203 785 2,271
</TABLE>
(2) Including undistributed (distributions in excess of) net investment income
(000) of $72 and $(68) for Limited Term Income, $0 and $5 for Intermediate
Term Income, $6 and $8 for Fixed Income, and $2 and $0 for Colorado
Intermediate Tax Free Fund at September 30, 1994 and September 30, 1993,
respectively.
(3) Including undistributed net investment income (000) of $8 and $50 for
Managed Income, $0 and $11 for Limited Term Tax Free Fund at September 30,
1994 and November 30, 1993, respectively.
(4) The Limited Term Income, Intermediate Term Income, and Mortgage Securities
Fund commenced operations on December 14, 1992.
(5) On April 28, 1994, the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994.
(6) The Managed Income Fund commenced operations on November 17, 1992.
(7) The Colorado Intermediate Tax Free Fund commenced operations on April 4,
1994.
(8) The Limited Term Tax Free Fund commenced operations on February 19, 1993.
(9) The Minnesota Insured Intermediate Tax Free Fund commenced operations on
February 28, 1994.
<TABLE>
<CAPTION>
ASSET EQUITY EQUITY
ALLOCATION FUND BALANCED FUND INDEX FUND INCOME FUND
10/1/93 12/14/92(4) 10/1/93 12/14/92(4) 10/1/93 12/14/92(4) 12/1/93 12/18/92(6)
to to to to to to to to
9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94(5) 11/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income (loss)--net $ 1,373 $ 1,044 $ 4,192 $ 2,227 $ 3,793 $ 2,422 $ 959 $ 1,468
Net realized gain (loss) on investments 1,042 590 2,435 1,339 1,237 84 (442) (23)
Net realized loss on forward foreign currency
contracts and foreign currency transactions -- -- -- -- -- -- -- --
Net change in unrealized appreciation
(depreciation) of investments (1,588) 2,615 (3,010) 4,394 56 6,106 334 (401)
Net change in unrealized depreciation on
forward foreign currency contracts, foreign
currency and translation of other assets and
liabilities in foreign currency -- -- -- -- -- -- -- --
Net increase (decrease) in net assets
resulting from operations 827 4,249 3,617 7,960 5,086 8,612 851 1,044
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (991) -- (2,793) -- (2,885) -- (61) (1,457)
Retail class A (384) (1,032) (1,366) (2,236) (912) (2,380) (880) --
Retail class B -- -- -- -- -- -- -- --
Net realized gain on investments:
Institutional class -- -- -- -- -- -- -- --
Retail class A (713) -- (1,884) (181) (188) -- -- --
Retail class B -- -- -- -- -- -- -- --
Total distributions (2,088) (1,032) (6,043) (2,417) (3,985) (2,380) (941) (1,457)
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Transfer from retail class A 51,261 -- 109,870 -- 143,478 -- 6,302 --
Proceeds from sales 6,840 -- 28,604 -- 33,718 -- 12,340 --
Reinvestment of distributions 987 -- 2,773 -- 2,867 -- 20 --
Payments for redemptions (13,790) -- (18,873) -- (23,678) -- (800) --
Increase in net assets from Institutional
class transactions 45,298 -- 122,374 -- 156,385 -- 17,862 --
Retail class A:
Proceeds from sales 3,688 64,582 24,928 114,827 17,529 137,520 3,926 35,768
Reinvestment of distributions 1,097 1,032 3,244 2,416 1,100 2,380 737 1,278
Payments for redemptions (6,020) (12,438) (10,460) (11,561) (8,148) (6,175) (25,578) (7,847)
Transfer to institutional class (51,261) -- (109,870) -- 143,478) -- (6,302) --
Increase (decrease) in net assets from Retail
class A
transactions (52,496) 53,176 (92,158) 105,682 (132,997) 133,725 (27,217) 29,199
Retail class B:
Proceeds from sales 11 -- 274 -- 29 -- 1 --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Increase in net assets from Retail class B
transactions 11 -- 274 -- 29 -- 1 --
Increase (decrease) in net assets from capital
share transactions (7,187) 53,176 30,490 105,682 23,417 133,725 (9,354) 29,199
Total increase (decrease) in net assets (8,448) 56,393 28,064 111,225 24,518 139,957 (9,444) 28,786
NET ASSETS AT BEGINNING OF PERIOD 56,393 -- 111,225 -- 139,957 -- 28,786 --
NET ASSETS AT END OF PERIOD (2)(3) $47,945 $56,393 $139,289 $111,225 $164,475 $139,957 $ 19,342 $28,786
(1)Capital share transactions:
Institutional class:
Transfer from retail class A 5,136 -- 10,707 -- 14,112 -- 600 --
Proceeds from sales 658 -- 2,697 -- 3,201 -- 1,247 --
Reinvestment of distributions 95 -- 261 -- 271 -- 2 --
Payments for redemptions (1,341) -- (1,774) -- (2,248) -- (81) --
Total Institutional class transactions 4,548 -- 11,891 -- 15,336 -- 1,768 --
Retail class A:
Proceeds from sales 345 6,420 2,312 11,238 1,626 13,574 397 3,572
Reinvestment of distributions 103 100 303 231 102 230 75 129
Payments for redemptions (564) (1,200) (967) (1,107) (753) (596) (2,600) (784)
Transfer to institutional class (5,136) -- (10,707) -- (14,112) -- (600) --
Total Retail class A transactions (5,252) 5,320 (9,059) 10,362 (13,137) 13,208 (2,730) 2,917
Retail class B:
Proceeds from sales 1 -- 26 -- 3 -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Total Retail class B transactions 1 -- 26 -- 3 -- -- --
NET INCREASE (DECREASE) IN CAPITAL SHARES (703) 5,320 2,858 10,362 2,202 13,208 (962) 2,917
</TABLE>
<TABLE>
<CAPTION>
EMERGING
DIVERSIFIED SPECIAL REGIONAL GROWTH TECHNOLOGY INTERNATIONAL
GROWTH FUND STOCK FUND EQUITY FUND EQUITY FUND FUND FUND FUND
12/1/93 12/18/92(6) 10/1/93 10/1/92 10/1/93 10/1/92 10/1/93 12/14/92(4) 4/4/94(7) 4/4/94(7) 4/4/94(7)
to to to to to to to to to to to
9/30/94(5) 11/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/94 9/30/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 304 $ 343 $ 2,724 $ 1,737 $ 2,024 $ 1,127 $ 611 $ 212 $ 4 $ (3) $ (29)
(3,037) (44) 7,831 2,511 8,668 5,111 2,221 846 66 143 (177)
-- -- -- -- -- -- -- -- -- -- (443)
1,902 (1,619) 319 7,539 7,538 2,853 2,652 7,251 239 731 1,309
-- -- -- -- -- -- -- -- -- -- (40)
(831) (1,320) 10,874 11,787 18,230 9,091 5,484 8,309 309 871 620
(95) (291) (2,082) -- (1,518) -- (486) -- (3) -- --
(242) -- (608) (1,721) (490) (1,147) (112) (225) -- -- --
-- -- (2) -- (1) -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
-- -- (3,673) (101) (5,674) (373) (888) -- -- -- --
-- -- -- -- -- -- -- -- -- --
(337) (291) (6,365) (1,822) (7,683) (1,520) (1,486) (225) (3) -- --
2,393 -- 110,876 -- 88,018 -- 61,030 -- -- -- --
32,761 -- 52,481 -- 29,156 -- 27,827 -- 6,695 5,773 47,575
68 -- 1,908 -- 1,418 -- 471 -- 1 -- --
(803) -- (24,357) -- (7,305) -- (4,225) -- (148) (145) (225)
34,419 -- 140,908 -- 111,287 -- 85,103 -- 6,548 5,628 47,350
2,689 37,488 20,003 151,544 18,076 76,349 23,298 51,829 86 53 459
229 276 4,166 1,758 5,968 1,502 997 225 -- -- --
(31,086) (5,069) (29,532) (32,725) (3,615) (7,109) (6,404) (1,711) -- -- (2)
(2,393) -- (110,876) -- (88,018) -- (61,030) -- -- -- --
(30,561) 32,695 (116,239) 120,577 (67,589) 70,742 (43,139) 50,343 86 53 457
13 -- 350 -- 364 -- 186 -- 18 2 22
-- -- 2 -- 1 -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
13 -- 352 -- 365 -- 186 -- 18 2 22
3,871 32,695 25,021 120,577 44,063 70,742 42,150 50,343 6,652 5,683 47,829
2,703 31,084 29,530 130,542 54,610 78,313 46,148 58,427 6,958 6,554 48,449
31,084 -- 134,186 3,644 81,899 3,586 58,427 -- -- -- --
$33,787 $ 31,084 $ 163,716 $134,186 $136,509 $ 81,899 $104,575 $ 58,427 $ 6,958 $ 6,554 $ 48,449
223 -- 7,556 -- 6,040 -- 5,673 -- -- -- --
3,361 -- 3,185 -- 1,778 -- 2,308 -- 664 595 4,717
7 -- 116 -- 85 -- 38 -- -- -- --
(89) -- (1,469) -- (457) -- (351) -- (15) (15) (22)
3,502 -- 9,388 -- 7,446 -- 7,668 -- 649 580 4,695
295 3,835 1,225 10,168 1,122 5,287 1,910 5,017 9 6 45
25 30 260 113 383 100 84 20 -- -- --
(3,198) (555) (1,808) (2,152) (224) (469) (539) (153) -- -- --
(223) -- (7,556) -- (6,040) -- (5,673) -- -- -- --
(3,101) 3,310 (7,879) 8,129 (4,759) 4,918 (4,218) 4,884 9 6 45
1 -- 21 -- 21 -- 15 -- 2 -- 2
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
1 -- 21 -- 21 -- 15 -- 2 -- 2
402 3,310 1,531 8,129 2,708 4,918 3,465 4,884 660 586 4,742
</TABLE>
(2) Including undistributed (distributions in excess of) net investment income
(000) of $10 and $12 for Asset Allocation, $24 and $(9) for Balanced, $38
and $42 for Equity Index, $52 and $20 for Stock, $0 and $(15) for Special
Equity, $0 and ($13) for Regional Equity, $1 and $0 for Emerging Growth and
accumulated net investment (loss) of ($3) and $0 for Technology Fund,
($415) and $0 for International, at September 30, 1994 and September 30,
1993, respectively.
(3) Including undistributed net investment income (000) of $20 and $52 for
Diversified Growth, $30 and $12 for Equity Income at September 30, 1994 and
November 30, 1993, respectively.
(4) The Asset Allocation, Balanced, Equity Index and Regional Equity Fund
commenced operations on December 14, 1992.
(5) On April 28, 1994, the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994.
(6) The Diversified Growth and Equity Income Fund commenced operations on
December 18, 1992.
(7) The Emerging Growth, International, and Technology Fund commenced
operations on April 4, 1994.
FINANCIAL HIGHLIGHTS
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS NET ASSET
VALUE NET GAINS OR FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM END OF END OF
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIMITED TERM INCOME
INSTITUTIONAL CLASS
1994(1) $10.02 $0.29 $(0.17) $(0.29) $ -- $ 9.85 1.24%+ $ 70,266
RETAIL CLASS A
1994 $10.06 $0.44 $(0.22) $(0.43) -- $ 9.85 2.21% $ 9,509
1993(2) 10.00 0.29 0.07 (0.30) $ -- 10.06 3.61%+ 121,800
RETAIL CLASS B
1994(3) $ 9.86 $0.04 $ 0.01 $(0.07) $ -- $ 9.84 0.51%+ $ 1
INTERMEDIATE TERM INCOME
INSTITUTIONAL CLASS
1994(1) $10.01 $0.31 $(0.46) $(0.31) $ -- $ 9.55 (1.48%)+ $ 68,445
RETAIL CLASS A
1994 $10.22 $0.46 $(0.56) $(0.46) $(0.11)* $ 9.55 (1.05%) $ 3,208
1993(2) 10.00 0.41 0.29 (0.41) (0.07) 10.22 7.21%+ 67,291
FIXED INCOME
INSTITUTIONAL CLASS
1994(1) $11.11 $0.38 $(0.74) $(0.38) $ -- $10.37 (3.23%)+ $ 90,187
RETAIL CLASS A
1994 $11.38 $0.57 $(0.89) $(0.57) $(0.12)** $10.37 (2.92%) $ 8,028
1993 11.13 0.62 0.36 (0.61) (0.12) 11.38 9.20% 53,601
1992 10.59 0.66 0.60 (0.66) (0.06) 11.13 12.34% 5,645
1991(4) 10.01 0.65 0.58 (0.65) -- 10.59 12.48%+ 6,045
1990(5) 10.44 0.74 (0.26) (0.74) (0.17) 10.01 5.14% 2,209
1989(5) 10.13 0.74 0.31 (0.74) -- 10.44 10.93% 555
1988(5)(6) 10.03 0.62 0.13 (0.65) -- 10.13 8.07%+ 240
RETAIL CLASS B
1994(3) $10.54 $0.08 $(0.17) $(0.10) $ -- $10.35 (0.88%)+ $ 115
MANAGED INCOME
INSTITUTIONAL CLASS
1994(7) $ 9.57 $0.11 $(0.06) $(0.11) $ -- $ 9.51 0.50%+ $ 45,061
RETAIL CLASS A
1994(8) $ 9.78 $0.52 $(0.26) $(0.52) $ -- $ 9.52 2.71%+ $ 6,004
1993(9)(10) 10.00 0.61 (0.23) (0.60) $ -- 9.78 3.88%+ 73,748
INTERMEDIATE GOVERNMENT BOND
INSTITUTIONAL CLASS
1994(1) $ 9.41 $0.27 $(0.43) $(0.27) $ -- $ 8.98 (1.77%)+ $ 27,776
RETAIL CLASS A
1994 $ 9.52 $0.41 $(0.51) $(0.39) $(0.05)* $ 8.98 (1.13%) $ 1,977
1993 10.18 0.44 0.02 (0.44) (0.68) 9.52 4.99% 3,716
1992 10.25 0.60 0.28 (0.60) (0.35) 10.18 8.88% 589
1991(4) 10.01 0.65 0.24 (0.65) -- 10.25 9.13%+ 1,756
1990(5) 10.05 0.75 (0.04) (0.75) -- 10.01 7.41% 1,573
1989(5) 9.99 0.74 0.06 (0.74) -- 10.05 8.35% 1,501
1988(5)(6) 10.03 0.58 (0.01) (0.61) -- 9.99 6.18%+ 375
MORTGAGE SECURITIES
INSTITUTIONAL CLASS
1994(1) $10.30 $0.38 $(0.59) $(0.38) $ -- $ 9.71 (2.15%)+ $ 28,418
RETAIL CLASS A
1994 $10.34 $0.56 $(0.63) $(0.56) $ -- $ 9.71 (0.79%) $ 256
1993(2) 10.00 0.42 0.34 (0.42) -- 10.34 7.76%+ 30,515
LIMITED TERM TAX FREE INCOME
INSTITUTIONAL CLASS
1994(7) $ 9.98 $0.06 $(0.03) $(0.06) $ -- $ 9.95 0.27%+ $ 16,349
RETAIL CLASS A
1994(8) $10.03 $0.22 $(0.07) $(0.23) $ -- $ 9.95 1.50%+ $ 599
1993(9)(11) 10.00 0.18 0.02 (0.17) $ -- 10.03 2.02 19,330
INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1994(1) $10.89 $0.29 $(0.61) $(0.29) $ -- $10.28 (2.91%)+ $6,168
RETAIL CLASS A
1994 $10.92 $0.44 $(0.57) $(0.44) $(0.07)* $10.28 (1.25%) $1,128
1993 10.56 0.47 0.42 (0.47) (0.06) 10.92 8.66% 2,969
1992 10.34 0.53 0.22 (0.53) -- 10.56 7.23% 725
1991(4) 10.04 0.50 0.31 (0.50) (0.01) 10.34 8.15%+ 637
1990(5) 10.08 0.56 (0.04) (0.56) -- 10.04 5.31% 537
1989(5) 10.19 0.56 (0.11) (0.56) -- 10.08 4.57% 491
1988(5)(6) 10.03 0.47 0.16 (0.47) -- 10.19 6.73%+ 425
COLORADO INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1994(12) $10.00 $0.22 $ 0.16 $(0.22) $ -- $10.16 3.76%+ $ 7,281
RETAIL CLASS A
1994(12) $10.00 $0.21 $ 0.16 $(0.22) $ -- $10.15 3.66%+ $ 693
MINNESOTA INSURED INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1994(13) $10.00 $0.25 $(0.41) $(0.25) $ -- $ 9.59 (1.58%)+ $ 20,272
RETAIL CLASS A
1994(13) $10.00 $0.25 $(0.42) $(0.25) $ -- $ 9.58 (1.68%)+ $ 1,508
ASSET ALLOCATION
INSTITUTIONAL CLASS
1994(1) $10.68 $0.20 $(0.30) $(0.20) $ -- $10.38 (0.90%)+ $ 47,227
RETAIL CLASS A
1994 $10.60 $0.27 $(0.08) $(0.26) $(0.14) $10.39 1.81% $ 707
1993(2) 10.00 0.19 0.60 (0.19) -- 10.60 8.01%+ 56,393
RETAIL CLASS B
1994(3) $10.40 $0.05 $(0.03) $(0.05) $ -- $10.37 0.19% $ 11
BALANCED
INSTITUTIONAL CLASS
1994(1) $10.86 $0.25 $(0.32) $(0.25) $ -- $10.54 (0.64%)+ $125,285
RETAIL CLASS A
1994 $10.73 $0.34 $(0.02) $(0.34) $(0.17) $10.54 3.02% $ 13,734
1993(2) 10.00 0.28 0.75 (0.28) (0.02) 10.73 10.39%+ 111,225
RETAIL CLASS B
1994(3) $10.66 $0.06 $(0.12) $(0.07) $ -- $10.53 (0.55%)+ $ 270
EQUITY INDEX
INSTITUTIONAL CLASS
1994(1) $10.85 $0.20 $(0.18) $(0.20) $ -- $10.67 0.18%+ $163,688
RETAIL CLASS A
1994 $10.60 $0.25 $ 0.09 $(0.25) $(0.01) $10.68 3.25% $ 758
1993(2) 10.00 0.20 0.60 (0.20) -- 10.60 8.02%+ 139,957
RETAIL CLASS B
1994(3) $10.68 $0.01 $ 0.04 $(0.07) $ -- $10.66 0.48%+ $ 29
EQUITY INCOME
INSTITUTIONAL CLASS
1994(7) $ 9.90 $0.07 $(0.03) $(0.05) $ -- $ 9.89 0.45%+ $ 17,489
RETAIL CLASS A
1994(8) $ 9.87 $0.41 $ -- $(0.39) $ -- $ 9.89 4.22%+ $ 1,852
1993(9)(10) 10.00 0.57 (0.14) (0.56) -- 9.87 4.44%+ 28,786
RETAIL CLASS B
1994(3) $ 9.87 $0.04 $ 0.02 $(0.05) $ -- $ 9.88 0.57%+ $ 1
DIVERSIFIED GROWTH
INSTITUTIONAL CLASS
1994(7) $ 8.92 $0.03 $ 0.18 $(0.03) $ -- $ 9.10 2.36%+ $ 31,875
RETAIL CLASS A
1994(8) $ 9.39 $0.10 $(0.29) $(0.11) $ -- $ 9.09 (2.07%)+ $ 1,900
1993(9)(10) 10.00 0.11 (0.63) (0.09) -- 9.39 (5.18%)+ 31,084
RETAIL CLASS B
1994(3) $8.87 $0.01 $0.23 $(0.02) $ -- $9.09 2.75%+ $ 12
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE
EXPENSES TO INCOME TO NET ASSETS
AVERAGE AVERAGE (EXCLUDING PORTFOLIO
NET ASSETS NET ASSETS WAIVERS) TURNOVER RATE
0.60% 4.40% 1.03% 48%
0.60% 4.17% 1.23% 48%
0.60 3.61 1.27 104
1.60% 3.50% 2.03% 48%
0.58% 4.81% 1.07% 177%
0.69% 2.48% 1.24% 177%
0.70 4.90 1.29 163
0.61% 5.53% 0.92% 142%
0.68% 3.83% 1.06% 142%
0.70 5.65 1.14 91
0.99 6.12 2.68 180
0.99 6.85 4.11 176
1.07 7.49 5.46 144
1.22 7.26 22.44 157
0.96 7.18 20.70 93
1.70% 4.89% 1.92% 142%
0.60% 6.21% 0.81% 21%
0.68% 6.31% 1.06% 21%
0.65 6.69 1.07 39
0.36% 5.32% 1.45% 74%
0.53% 4.49% 2.14% 74%
0.71 4.00 4.73 182
0.99 6.03 14.14 101
0.99 6.99 6.76 100
1.08 7.57 5.55 40
1.19 7.49 9.65 72
0.95 6.78 17.20 0
0.56% 5.79% 1.07% 35%
0.70% 5.12% 1.30% 35%
0.70 5.24 1.42 29
0.60% 3.26% 1.28% 57%
0.90% 2.47% 1.53% 57%
0.81 2.30 1.76 22
0.45% 4.48% 2.20% 52%
0.59% 4.13% 2.78% 52%
0.71 4.31 5.09 27
0.99 4.83 16.09 23
0.99 5.35 15.48 15
1.08 5.58 13.85 4
1.09 5.57 19.55 4
0.84 5.87 13.60 0
0.69% 4.51% 4.71% 4%
0.69% 4.51% 4.96% 4%
0.67% 4.57% 1.59% 22%
0.67% 4.57% 1.84% 22%
0.75% 2.91% 1.12% 32%
0.75% 2.01% 1.29% 32%
0.75 2.40 1.34 31
1.75% 1.94% 2.12% 32%
0.75% 3.51% 1.05% 98%
0.77% 2.63% 1.24% 98%
0.75 3.31 1.29 77
1.75% 2.80% 2.05% 98%
0.35% 2.59% 1.03% 11%
0.35% 2.23% 1.23% 11%
0.35 2.52 1.30 1
1.35% 1.68% 2.03% 11%
0.75% 5.61% 1.14% 108%
0.88% 4.88% 1.39% 108%
0.75 6.09 1.36 68
1.75% 4.39% 2.14% 108%
0.75% 2.37% 1.08% 101%
0.90% 1.15% 1.33% 101%
0.78 1.26 1.25 5
1.75% 1.20% 2.08% 101%
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
* Represents distributions in excess of net realized gains.
** (0.11) consists of distributions in excess of net realized gains.
(1) Institutional Class shares have been offered since February 4, 1994. All
ratios for the period have been annualized.
(2) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(3) Retail Class B shares have been offered since August 15, 1994. All ratios
for the period have been annualized.
(4) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(5) For the period ended October 31.
(6) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(7) Institutional Class shares have been offered since August 2, 1994. All
ratios for the period have been annualized.
(8) On April 28, 1994 the Board of Directors of FAMF approved a change in the
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994. All ratios for the period have been annualized.
(9) For the period ended November 30.
(10) Commenced operations on December 18, 1992. All ratios for the period have
been annualized.
(11) Commenced operations on February 19, 1993. All ratios for the period have
been annualized.
(12) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(13) Commenced operations on February 28, 1994. All ratios for the period have
been annualized.
Financial Highlights (concluded)
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET NET UNREALIZED DIVIDENDS NET ASSET
VALUE INVESTMENT GAINS OR FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM END OF END OF
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK
INSTITUTIONAL CLASS
1994(1) $16.47 $0.25 $ 0.03 $(0.25) $ -- $16.50 1.70%+ $154,949
RETAIL CLASS A
1994 $16.00 $0.31 $ 1.00 $(0.30) $(0.50) $16.51 8.35% $ 8,421
1993 14.04 0.22 1.99 (0.23) (0.02) 16.00 15.82% 134,186
1992 13.62 0.24 0.81 (0.29) (0.34) 14.04 7.88% 3,644
1991(2) 10.64 0.28 2.95 (0.22) (0.03) 13.62 30.49%+ 2,386
1990(3) 12.09 0.25 (1.17) (0.25) (0.28) 10.64 (8.22%) 1,161
1989(3) 10.35 0.25 1.70 (0.20) (0.01) 12.09 20.33% 323
1988(3)(4) 10.03 0.27 0.35 (0.30) -- 10.35 6.40%+ 206
RETAIL CLASS B
1994(5) $16.65 $0.03 $(0.10) $(0.09) $ -- $16.49 (0.43%)+ $ 346
SPECIAL EQUITY
INSTITUTIONAL CLASS
1994(1) $16.34 $0.22 $ 0.96 $(0.22) $ -- $17.30 7.31%+ $128,806
RETAIL CLASS A
1994 $15.81 $0.28 $ 2.52 $(0.28) $(1.03) $17.30 18.70% $ 7,333
1993 13.61 0.23 2.32 (0.25) (0.10) 15.81 18.91% 81,899
1992 12.98 0.21 1.61 (0.27) (0.92) 13.61 15.17% 3,586
1991(2) 10.33 0.30 2.61 (0.26) -- 12.98 28.38%+ 3,423
1990(3) 12.96 0.47 (2.03) (0.46) (0.61) 10.33 (13.24%) 2,761
1989(3) 11.55 0.47 1.39 (0.41) (0.04) 12.96 17.41% 2,000
1988(3)(4) 10.03 0.34 1.57 (0.39) -- 11.55 19.56%+ 578
RETAIL CLASS B
1994(5) $16.51 $0.01 $ 0.85 $(0.08) $ -- $17.29 5.22%+ $ 370
REGIONAL EQUITY
INSTITUTIONAL CLASS
1994(1) $12.41 $0.07 $ 0.11 $(0.07) $ -- $12.52 1.46%+ $ 96,045
RETAIL CLASS A
1994 $11.96 $ 0.08 $ 0.71 $(0.07) $(0.16) $12.52 6.76% $ 8,345
1993(6) 10.00 0.05 1.96 (0.05) -- 11.96 20.17%+ 58,427
RETAIL CLASS B
1994(5) $12.19 $ -- $ 0.33 $(0.02) $ -- $12.50 2.73%+ $ 185
EMERGING GROWTH
INSTITUTIONAL CLASS
1994(7) $10.00 $ 0.01 $ 0.56 $(0.01) $ -- $10.56 5.68%+ $ 6,849
RETAIL CLASS A
1994(7) $10.00 $ 0.01 $ 0.57 $(0.01) $ -- $10.57 5.88%+ $ 91
RETAIL CLASS B
1994(5) $ 9.89 $(0.01) $ 0.67 $ -- $ -- $10.55 6.67%+ $ 18
TECHNOLOGY
INSTITUTIONAL CLASS
1994(7) $10.00 $(0.01) $ 1.19 $ -- $ -- $11.19 11.90%+ $ 6,491
RETAIL CLASS A
1994(7) $10.00 $(0.01) $ 1.20 $ -- $ -- $11.19 11.90%+ $ 61
RETAIL CLASS B
1994(5) $ 9.85 $(0.02) $ 1.34 $ -- $ -- $11.17 13.40%+ $ 2
INTERNATIONAL
INSTITUTIONAL CLASS
1994(7) $10.00 $(0.01) $ 0.23 $ -- $ -- $10.22 2.20%+ $47,963
RETAIL CLASS A
1994(8) $ 9.98 $(0.01) $ 0.24 $ -- $ -- $10.21 2.30%+ $ 464
RETAIL CLASS B
1994(5) $10.23 $(0.01) $(0.01) $ -- $ -- $10.21 (0.20%)+ $ 22
(table continued)
RATIO OF NET RATIO OF
INVESTMENT EXPENSES TO
RATIO OF INCOME AVERAGE
EXPENSES TO (LOSS) NET ASSETS
AVERAGE TO AVERAGE (EXCLUDING PORTFOLIO
NET ASSETS NET ASSETS WAIVERS) TURNOVER RATE
0.75% 2.28% 1.01% 65%
0.76% 1.51% 1.20% 65%
0.75 1.94 1.28 48
1.45 1.75 4.46 39
1.45 2.47 7.42 76
1.45 2.24 9.47 41
1.24 2.26 36.39 74
1.02 2.67 28.60 80
1.75% 1.58% 2.01% 65%
0.79% 1.93% 1.03% 116%
0.81% 1.88% 1.23% 116%
0.81 2.07 1.31 104
1.50 1.61 4.18 146
1.50 2.60 5.13 116
1.50 4.09 4.21 113
1.38 4.07 8.68 102
1.20 4.02 15.60 51
1.68% 0.47% 2.03% 116%
0.80% 0.82% 1.05% 41%
0.82% 0.59% 1.25% 41%
0.80 0.59 1.30 28
1.80% (0.41)% 2.05% 41%
0.80% 0.23% 2.59% 19%
0.79% 0.23% 2.84% 19%
1.80% (0.85%) 3.59% 19%
0.80% (0.21%) 3.12% 43%
0.80% (0.21%) 3.37% 43%
1.80% (1.44%) 4.12% 43%
1.75% (0.19%) 2.05% 16%
1.75% (0.26%) 2.30% 16%
2.75% (0.71%) 3.05% 16%
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
(1) Institutional Class shares have been offered since February 4, 1994. All
ratios for the period have been annualized.
(2) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(3) For the period ended October 31.
(4) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(5) Retail Class B shares have been offered since August 15, 1994. All ratios
for the period have been annualized.
(6) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(7) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(8) Retail Class A shares have been offered since April 7, 1994. All ratios for
the period have been annualized.
NOTES TO FINANCIAL STATEMENTS----SEPTEMBER 30, 1994
1 ORGANIZATION
First American Limited Term Income Fund, Intermediate Term Income Fund, Fixed
Income Fund, Intermediate Government Bond Fund (formerly Government Bond
Fund), Mortgage Securities Fund, Intermediate Tax Free Fund (formerly
Municipal Bond Fund), Colorado Intermediate Tax Free Fund, Minnesota Insured
Intermediate Tax Free Fund, Asset Allocation Fund, Balanced Fund, Equity
Index Fund, Stock Fund, Special Equity Fund, Regional Equity Fund, Emerging
Growth Fund, Technology Fund, International Fund, and Limited Volatility
Stock Fund are funds offered by First American Investment Funds, Inc. (FAIF).
The First American Managed Income Fund (formerly Boulevard Managed Income
Fund), Limited Term Tax Free Income Fund (formerly Boulevard Managed
Municipal Fund), Equity Income Fund (formerly Boulevard Strategic Balance
Fund) and Diversified Growth Fund (formerly Boulevard Blue-Chip Growth Fund)
are funds offered by First American Mutual Funds (FAMF), formerly The
Boulevard Funds. FAIF and FAMF (collectively the "Funds") are registered
under the Investment Company Act of 1940, as amended, as open end, management
investment companies. The Limited Volatility Stock Fund was not in operation
at September 30, 1994. The Funds' articles of incorporation permit the Board
of Directors to create additional funds in the future.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
Security Valuation -- Investment securities of the Funds which are listed on
a securities exchange for which market quotations are available are valued by
an independent pricing service at the last quoted sales price for such
securities on each business day. If there is no such reported sale, these
securities and unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price. Debt obligations
with sixty days or less remaining until maturity may be valued at their
amortized cost. Under this valuation method, purchase discounts and premiums
are accreted and amortized ratably to maturity and are included in interest
income. Foreign securities are valued based upon quotation from the primary
market in which they are traded. When market quotations are not readily
available, securities are valued at fair value as determined in good faith by
procedures established by the Board of Directors.
Security Transactions and Investment Income -- The Funds record security
transactions on the trade date, the date the securities are purchased or
sold. Dividend income is recorded on the ex-dividend date. Interest income,
including amortization of bond premium and discount, is recorded on the
accrual basis. Security gains and losses are determined on the basis of
identified cost, which is the same basis used for Federal income tax
purposes.
Distributions to Shareholders -- Limited Term Income Fund, Intermediate Term
Income Fund, Fixed Income Fund, Managed Income Fund, Intermediate Government
Bond Fund, Mortgage Securities Fund, Limited Term Tax Free Income Fund,
Intermediate Tax Free Fund, Colorado Intermediate Tax Free Fund, Minnesota
Insured Intermediate Tax Free Fund, Asset Allocation Fund, Balanced Fund, and
Equity Income Fund declare and pay income dividends monthly. Equity Index
Fund, Diversified Growth Fund, Stock Fund, Special Equity Fund, Regional
Equity Fund, Emerging Growth Fund and Technology Fund declare and pay income
dividends quarterly. International Fund declares and pays dividends annually.
Any net realized capital gains on sales of securities for a fund are
distributed to shareholders at least annually.
Federal Taxes -- It is each Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required. For Federal
income tax purposes required distributions related to realized gains from
security transactions are computed as of October 31st.
During the current period, the Funds adopted Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gains and Return of Capital Distributions by Investment Companies."
Accordingly, the timing and character of dividend distributions and the
differences in accounting for income and realized gains (losses) may differ
for financial statement and federal income tax purposes. There was no effect
on net assets as a result of adopting this Statement. On the Statement of Net
Assets, as a result of the differences in the characterization of certain
foreign currency realized and unrealized gains (losses), reclassification
adjustments have been made to the International Fund to increase the
accumulated net investment loss by approximately $386,000 with an equivalent
offset to the accumulated net realized loss on investments and foreign
currency transactions. Except for the International Fund, the implementation
of the Statement had no material effect on paid in capital or other
components of net assets. Dividends distributed from net realized gains from
security transactions are in excess of net realized gains during the fiscal
year for the FAIF Intermediate Term Income Fund, Fixed Income Fund,
Intermediate Government Bond Fund, and Intermediate Tax Free Fund on a
generally accepted accounting principles basis primarily due to timing
differences.
Repurchase Agreements -- The Funds may enter into repurchase agreements with
member banks of the Federal Deposit Insurance Company or registered broker
dealers whom the Adviser or Sub-Adviser deems creditworthy under guidelines
approved by the Board of Directors, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The
repurchase price would generally equal the price paid by the Fund plus
interest negotiated on the basis of current short-term rates.
Securities pledged as collateral for repurchase agreements are held by the
custodian bank until the respective agreements mature. Provisions of the
repurchase agreements ensure that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default of
the counterparty. If the counterparty defaults and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities which have been purchased by a Fund on a forward commitment or
when-issued basis can take place up to a month or more after the transaction
date. During this period, such securities are subject to market fluctuations
and the portfolio maintains, in a segregated account with its custodian,
assets with a market value equal to or greater than the amount of its
purchase commitments.
Foreign Currency Translation -- The books and records of the International
Fund are maintained in U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The International Fund does not isolate that portion of gains and losses on
investments in equity securities which is due to changes in the foreign
exchange rates from that which is due to change in market prices of equity
securities.
The International Fund reports certain foreign currency related transactions
as components of realized gains for financial reporting purposes, whereas
such components are treated as ordinary income for Federal income tax
purposes.
Forward Foreign Currency Contracts -- The International Fund enters into
forward foreign currency contracts as hedges against either specific
transactions or fund positions. The aggregate principal amount of the
contracts are not recorded as the International Fund intends to settle the
contracts prior to delivery. All commitments are "marked-to-market" daily at
the applicable foreign exchange rate and any resulting unrealized gains or
losses are recorded currently. The International Fund realizes gains or
losses at the time the forward contracts are extinguished. Unrealized gains
or losses on outstanding positions in forward foreign currency contracts held
at the close of the year will be recognized as ordinary income or loss for
Federal income tax purposes.
Expenses -- Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses are prorated to the
Funds on the basis of relative net asset value. Class specific expenses, such
as the 12b-1 fees, are borne by that class. Income, other expenses and
realized and unrealized gains and losses of a Fund are allocated to the
respective class on the basis of the relative net asset value each day.
3 INVESTMENT SECURITY TRANSACTIONS
During the period ended September 30, 1994, purchases of securities and
proceeds from sales of securities, other than temporary investments in
short-term securities, were as follows (000):
U.S. GOVERNMENT OTHER INVESTMENT
SECURITIES SECURITIES
PURCHASES SALES PURCHASES SALES
Limited Term
Income Fund $ 1,970 $ 5,959 $40,719 $81,543
Intermediate Term
Income Fund 94,780 100,805 16,453 6,341
Fixed Income Fund 118,363 70,252 9,669 12,182
Managed Income
Fund -- 1 12,405 17,895
Intermediate
Government
Bond Fund 27,827 5,125 -- 12
Mortgage
Securities Fund 6,339 9,079 3,359 4,317
Limited Term Tax
Free Income Fund -- -- 9,930 11,273
Intermediate Tax
Free Fund -- -- 5,760 1,720
Colorado
Intermediate
Tax Free Fund -- -- 7,315 98
Minnesota Insured
Intermediate Tax
Free Fund -- -- 22,267 2,102
Asset Allocation
Fund 13,712 5,043 2,194 27,662
Balanced Fund 90,103 83,101 51,430 33,802
Equity Index Fund -- -- 38,452 16,989
Equity Income
Fund -- 2,363 22,042 28,496
Diversified
Growth Fund -- -- 26,922 26,807
Stock Fund -- -- 91,366 82,646
Special Equity
Fund -- -- 102,628 94,738
Regional Equity
Fund -- -- 54,860 28,030
Emerging Growth
Fund -- -- 5,875 703
Technology Fund -- -- 6,942 1,510
International
Fund -- -- 43,758 4,623
At September 30, 1994 the total cost of securities for Federal Income Tax
purposes, was not materially different from amounts reported for financial
reporting purposes. The aggregate gross unrealized appreciation and
depreciation for securities held by the Funds at September 30, 1994 is as
follows (000):
AGGREGATE AGGREGATE
GROSS GROSS
APPRECIATION DEPRECIATION NET
Limited Term Income Fund $ 12 $ (1,431) $(1,419)
Intermediate Term Income Fund 18 (2,177) (2,159)
Fixed Income Fund 27 (3,209) (3,182)
Managed Income Fund 1 (1,655) (1,654)
Intermediate Government Bond
Fund -- (324) (324)
Mortgage Securities Fund 36 (1,273) (1,237)
Limited Term Tax Free Income Fund 5 (85) (80)
Intermediate Tax Free Fund 14 (112) (98)
Colorado Intermediate Tax Free
Fund 13 (45) (32)
Minnesota Insured Intermediate
Tax Free Fund 10 (262) (252)
Asset Allocation Fund 3,310 (2,283) 1,027
Balanced Fund 7,366 (5,982) 1,385
Equity Index Fund 16,732 (10,570) 6,162
Equity Income Fund 273 (340) (67)
Diversified Growth Fund 1,355 (1,072) 283
Stock Fund 13,079 (5,018) 8,061
Special Equity Fund 12,713 (2,269) 10,444
Regional Equity Fund 15,988 (6,085) 9,903
Emerging Growth Fund 587 (348) 239
Technology Fund 888 (157) 731
International Fund 2,620 (1,311) 1,309
At September 30, 1994 the following funds have capital loss carryforwards:
EXPIRATION
AMOUNT DATE
Intermediate Term Income Fund $ 406,191 2003
Fixed Income Fund 121,979 2003
Managed Income Fund 436,996 2001
1,433,968 2002
Intermediate Government Bond Fund 76,938 2003
Mortgage Securities Fund 62,215 2003
Limited Term Tax Free Income Fund 1,667 2001
13,855 2002
Intermediate Tax Free Fund 41,294 2003
Minnesota Insured Intermediate Tax
Free Fund 11,686 2003
Equity Income Fund 21,770 2001
359,517 2002
Diversified Growth Fund 43,652 2001
3,037,582 2002
International Fund 109,607 2002
4 FEES AND EXPENSES
Pursuant to an investment advisory agreement (the Agreement), First Bank
National Association (the Adviser) manages each Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Agreement
requires each Fund to pay the Adviser a monthly fee based upon average daily
net assets. The fee for all funds, other than the International Fund, is
equal to an annual rate of .70% of the average daily net assets. The fee for
the International Fund is equal to an annual rate of 1.25% of average daily
net assets. Through a separate contractual agreement, First Trust National
Association, an affiliate of the Adviser, serves as the Funds' custodian.
Marvin & Palmer Associates, Inc., serves as Sub-Adviser to the International
Fund pursuant to a Sub-Advisory Agreement with the Adviser.
SEI Financial Services Company (SFS) and SEI Financial Management
Corporation, (SFM) serve as distributor and administrator of the Funds,
respectively. Under the distribution plan, each of the Funds pay SFS a
monthly distribution fee of .25% of each Fund's average daily net assets of
the Retail class A shares and 1.00% of the Retail class B shares, which may
be used by SFS to provide compensation for sales support and distribution
activities. SFM provides administrative services, including certain
accounting, legal and shareholder services, at an annual rate of .20% of each
Fund's average daily net assets, with a minimum annual fee of $50,000 per
Fund.
Pursuant to prior agreements which terminated April 30, 1994 (June 9, 1994
for the transfer agent agreement), Federated Securities Corp., Federated
Administrative Services and Federated Services Company served as the Funds'
distributor, administrator and transfer agent, respectively for FAMF.
A Contingent Deferred Sales Charge (CDSL) is imposed on redemptions made in
the Retail Class B. The CDSL varies depending on the number of years from
time of payment for the purchase of Class B shares until the redemption of
such shares.
CONTINGENT DEFERRED SALES
CHARGE
YEAR SINCE AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CHARGE
FIRST 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
For the year ended September 30, 1994, sales charges retained by SFS for
distributing the Funds' shares were approximately $97,000.
In addition to the investment advisory and management fees, custodian fees,
distribution fees, administrator and transfer agent fees, each fund is
responsible for paying most other operating expenses including organization
costs, fees and expenses of outside directors, registration fees, printing
shareholder reports, legal, auditing, insurance and other miscellaneous
expenses.
During the period ended September 30, 1994, the Adviser and other parties
waived a portion of their contractual fees in order to assist the Funds in
maintaining a competitive expense ratio. Expenses were waived as follows
(000):
WAIVER OF
INVESTMENT WAIVER OF WAIVER OF WAIVER OF
ADVISORY ADMINISTRATOR DISTRIBUTION CUSTODIAN
FEES FEES FEES (1) FEES
Limited Term Income
Fund $370 $17 $120 $ 1
Intermediate Term
Income Fund 251 13 64 1
Fixed Income Fund 137 14 62 1
Managed Income Fund 239 34 2 --
Intermediate
Government Bond Fund 40 38 7 1
Mortgage Securities
Fund 134 6 29 4
Limited Term Tax Free
Income Fund 91 30 -- --
Intermediate Tax Free
Fund 24 40 5 --
Colorado Intermediate
Tax Free Fund 2 36 1 --
Minnesota Insured
Intermediate Tax
Free Fund 25 32 2 --
Asset Allocation Fund 159 10 51 10
Balanced Fund 329 16 118 4
Equity Index Fund 968 39 135 10
Equity Income Fund 94 28 1 --
Diversified Growth
Fund 97 36 1 --
Stock Fund 296 21 120 4
Special Equity Fund 222 14 88 1
Regional Equity Fund 180 11 68 2
Emerging Growth Fund 10 28 -- --
Technology Fund 7 30 -- --
International Fund 40 5 -- --
(1) Retail class A
For the period ended September 30, 1994, legal fees and expenses were paid to a
law firm of which the secretary of the funds is a partner.
5 DEFERRED ORGANIZATIONAL COSTS
The Funds incurred organization expenses in connection with their start-up
and initial registration. These costs were allocated equally to each fund and
are being amortized over 60 months on a straight-line basis.
6 FORWARD FOREIGN CURRENCY CONTRACTS
The following forward foreign currency contracts were outstanding at
September 30, 1994.
INTERNATIONAL FUND
NET
CONTRACTS TO IN UNREALIZED
DELIVER/ EXCHANGE APPRECIATION/
SETTLEMENT RECEIVE FOR (DEPRECIATION)
DATES (000) (000) (000)
Foreign Currency
Sales 10/6/94 CH 600 $ 462 $ (4)
10/6/94 DM 750 485 2
10/6/94 FF 710 134 --
10/6/94 IT 1,557,330 987 (11)
10/6/94 NG 160 92 --
10/6/94 SK 11,050 1,443 (32)
10/6/94 UK 250 387 (7)
10/3/94-10/6/94 JY 735,936 7,448 14
$11,438 $(38)
Foreign Currency
Purchases 10/3/94 JY 71,514 $ 727 $ (4)
10/5/94 DM 159 103 (1)
$ 830 $ (5)
$(43)
CURRENCY LEGEND
CH Swiss Francs
DM German Marks
FF French Francs
IT Italian Lira
JY Japanese Yen
NG Netherland Guilders
SK Swedish Krona
UK British Pounds Sterling
7 PROPOSED FUND MERGER
The Board of Directors of the Funds have approved, subject to shareholder
approval, the acquisition of the FAMF Managed Income Fund by the FAIF Limited
Term Income Fund. The acquisition will be accounted for by the method of
accounting for tax free mergers of investment companies (sometimes referred
to as the pooling without restatement method). Under the proposed merger
agreement and plan of reorganization, Retail Class A and Institutional Class
shares of the FAMF Managed Income Fund will be exchanged for Retail Class A
and Institutional Class shares of the FAIF Limited Term Income Fund. If the
exchange were to have occurred as of September 30, 1994, one share of the
FAMF Managed Income Fund Retail Class A would have been exchanged for .9665
shares of the FAIF Limited Term Income Fund Retail Class A and one share of
the FAMF Managed Income Fund Institutional Class would have been exchanged
for .9655 shares of the FAIF Limited Term Income Fund Institutional Class.
In addition, under a proposed merger agreement and plan of reorganization,
subject to shareholder approval, FAMF Limited Term Tax Free Income Fund, FAMF
Equity Income Fund and FAMF Diversified Growth Fund, will each be merged into
a new FAIF fund identical to the existing FAMF fund.
8 CONCENTRATION OF CREDIT RISK
The Limited Term Tax Free Income Fund, Intermediate Tax Free Fund, Colorado
Intermediate Tax Free Fund, and Minnesota Insured Intermediate Tax Free Fund
invest in debt instruments of municipal issuers. Although these Funds
maintain a diversified portfolio, the issuers ability to meet their
obligations may be affected by economic developments in a specific state or
region.
The Limited Term Tax Free Income Fund, Intermediate Tax Free Fund, Colorado
Intermediate Tax Free Fund, and Minnesota Insured Intermediate Tax Free Fund
invest in securities which include revenue bonds, tax and revenue
anticipation notes, and general obligation bonds. At September 30, 1994, the
percentage of portfolio investments by each revenue source was as follows:
LIMITED COLORADO MINNESOTA
TERM INTERMEDIATE INTERMEDIATE INSURED
TAX FREE TAX FREE TAX FREE INTERMEDIATE
FUND FUND FUND TAX FREE FUND
Revenue Bonds:
Education Bonds 5% 7% 11% 4%
Health Care Bonds 8 17 1 14
Transportation
Bonds 11 4 4 5
Utility Bonds 26 16 3 7
Housing Bonds 5 5 4 27
Pollution Control
Bonds -- -- 2 5
Industrial Bonds 4 -- 2 --
Other 6 14 15 14
GENERAL
OBLIGATIONS 32 36 52 20
TAX AND REVENUE
ANTICIPATION
NOTES 3 1 6 4
100% 100% 100% 100%
The rating of long-term debt as a percentage of total value of investments at
September 30, 1994 is as follows:
LIMITED COLORADO MINNESOTA
TERM INTERMEDIATE INTERMEDIATE INSURED
TAX FREE TAX FREE TAX FREE INTERMEDIATE
FUND FUND FUND TAX FREE FUND
STANDARD & POORS
RATINGS:
AAA 34% 51% 45% 79%
AA 27 14 16 2
AA+ 6 3 -- --
AA- 4 12 4 2
A+ 7 5 4 9
A 7 5 11 --
A- 2 -- -- --
BBB+ 3 -- -- --
BBB 1 -- -- --
NR 9 10 20 8
100% 100% 100% 100%
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
First American Investment Funds, Inc.
First American Mutual Funds:
We have audited the accompanying statements of net assets (or the statements
of assets and liabilities, including the schedules of investments) as of
September 30, 1994, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the seventeen
funds constituting First American Investment Funds, Inc. and each of the four
funds constituting First American Mutual Funds for each of the periods
presented. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on
our audits. The statements of changes in net assets and the financial
highlights of each of the four funds constituting First American Mutual Funds
(formerly The Boulevard Funds) for the periods presented ended November 30,
1993 were audited by other auditors whose reports dated January 20, 1994
expressed unqualified opinions on this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financialstatements. Investment securities held in custody
are verified by examination, or by confirmation with the sub-custodian or
depository. As to securities purchased and sold but not received or
delivered, we request confirmations from brokers and where replies are not
received, we carry out other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the seventeen funds constituting First American
Investment Funds, Inc. and each of the four funds constituting First American
Mutual Funds as of September 30, 1994, and the results of their operations,
changes in their net assets and the financial highlights for the periods
stated in the first paragraph above, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 4, 1994
NOTICE TO SHAREHOLDERS
For Taxpayers filing on a calendar year basis, this notice is for information
purposes only.
Dear First American Fund Shareholders:
For the fiscal year ended September 30, 1994, each portfolio is designating
long term capital gains and exempt income with regard to distributions paid
during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C) (E)
CAPITAL GAINS INCOME TOTAL (D) TAX
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT
FUND (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS(1) INTEREST
<S> <C> <C> <C> <C> <C>
Limited Term Income 0% 100% 100% 0% 0%
Intermediate Term Income 0% 100% 100% 0% 0%
Fixed Income 1% 99% 100% 0% 0%
Managed Income 0% 100% 100% 0% 0%
Intermediate Government Bond 3% 97% 100% 0% 0%
Mortgage Securities 0% 100% 100% 0% 0%
Limited Term Tax Free Income 0% 100% 100% 0% 99%
Intermediate Tax Free 10% 90% 100% 0% 98%
Colorado Intermediate Tax Free 0% 100% 100% 0% 98%
Minnesota Insured Intermediate Tax Free 0% 100% 100% 0% 98%
Asset Allocation 0% 100% 100% 76% 0%
Balanced 0% 100% 100% 28% 0%
Equity Index 0% 100% 100% 96% 0%
Equity Income 0% 100% 100% 16% 0%
Diversified Growth 0% 100% 100% 100% 0%
Stock 5% 95% 100% 40% 0%
Special Equity 3% 97% 100% 17% 0%
Regional Equity 0% 100% 100% 88% 0%
Emerging Growth 0% 100% 100% 4% 0%
Technology 0% 0% 0% 0% 0%
International 0% 0% 0% 0% 0%
</TABLE>
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a perventage of ordinary income distribution
of the portfolio.
(1) Qualifying dividends represent dividends which qualify for the
corporate dividends received deduction.
Please consult your tax adviser for proper treatment of this information.
FIRST AMERICAN MUTUAL FUNDS
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Investment Adviser
First Bank National Association
601 Second Avenue South
Minneapolis, Minnesota 55480
Custodian
FIRST TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
Administrator
SEI FINANCIAL MANAGEMENT CORPORATION
680 East Swedesford Road
Wayne, Pennsylvania 19087
Transfer Agent
SUPERVISED SERVICE COMPANY
811 Main Street
Kansas City, Missouri 64105
Distributor
SEI FINANCIAL SERVICES COMPANY
680 East Swedesford Road
Wayne, Pennsylvania 19087
Independent Auditors
KPMG PEAT MARWICK LLP
90 South Seventh Street
Minneapolis, Minnesota 55402
Counsel
DORSEY & WHITNEY
220 South Sixth Street
Minneapolis, Minnesota 55402
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the corporation. The report is
not authorized for distribution to prospective investors in the corporation
unless preceded or accompanied by an effective prospectus for each of the
Funds included. Shares in the Funds are not deposits or obligations of, or
guaranteed or endorsed by, First Bank National Association or any of its
affiliates. Such shares are also not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
FAIF-1303 11/94
PART B
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 18, 1995
PROPOSED ACQUISITION OF ASSETS OF
LIMITED VOLATILITY STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(800) 637-2548
BY AND IN EXCHANGE FOR SHARES OF
STOCK FUND
A SEPARATELY MANAGED SERIES OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(800) 637-2548
This Statement of Additional Information relates to the proposed Agreement
and Plan of Reorganization providing for (a) the acquisition of all of the
assets and the assumption of all liabilities of Limited Volatility Stock Fund
(the "Acquired Fund"), a separately managed series of First American Investment
Funds, Inc. ("FAIF") by Stock Fund (the "Acquiring Fund"), a separately managed
series of FAIF, in exchange for shares of common stock of the Acquiring Fund
having an aggregate net asset value equal to the aggregate value of the assets
acquired (less the liabilities assumed) of the Acquired Fund and (b) the
liquidation of the Acquired Fund and the pro rata distribution of the Acquiring
Fund shares to Acquired Fund shareholders. This Statement of Additional
Information consists of this cover page and the following documents, each of
which is incorporated by reference herein:
1. Statement of Additional Information of FAIF dated January 31, 1995,
containing additional information concerning the Retail Classes and
the Institutional Class of both the Acquired Fund and the Acquiring
Fund.
2. Annual report of FAIF for the fiscal year ended September 30, 1994,
relating to the Retail Classes and the Institutional Class of the
Acquiring Fund (the Acquired Fund not having commenced operations
during such period).
3. Semi-Annual report of FAIF for the six months ended March 31, 1995,
relating to the Retail Classes and the Institutional Class of both the
Acquired Fund and the Acquiring Fund.
This Statement of Additional Information is not a prospectus. A
Prospectus/Proxy Statement dated December 18, 1995 relating to the
above-referenced transaction may be obtained without charge by writing or
calling the Acquired Fund or the Acquiring Fund at the addresses or telephone
numbers noted above. This Statement of Additional Information relates to, and
should be read in conjunction with, such Prospectus/Proxy Statement.
Pursuant to Item 14(a) of Form N-14, pro forma financial statements are
omitted from this Statement of Additional Information inasmuch as the net asset
value of the Acquired Fund does not exceed ten percent of the Acquiring Fund's
net asset value as of the date which is five business days before the filing of
the Registration Statement on Form N-14 of which this Statement of Additional
Information is a part.
[Note: In the SEC filing package, Item No. 2 referred to above is included in
Part A as materials to be delivered with the Prospectus/Proxy Statement. A copy
of Item No. 2 also will be delivered to any person requesting the Statement of
Additional Information.]
FIRST AMERICAN INVESTMENT FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 31, 1995
STOCK FUND INTERNATIONAL FUND
EQUITY INDEX FUND LIMITED TERM INCOME FUND
BALANCED FUND INTERMEDIATE TERM INCOME FUND
LIMITED VOLATILITY STOCK FUND FIXED INCOME FUND
ASSET ALLOCATION FUND INTERMEDIATE GOVERNMENT BOND FUND
EQUITY INCOME FUND MORTGAGE SECURITIES FUND
DIVERSIFIED GROWTH FUND LIMITED TERM TAX FREE INCOME FUND
EMERGING GROWTH FUND INTERMEDIATE TAX FREE FUND
REGIONAL EQUITY FUND MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
SPECIAL EQUITY FUND COLORADO INTERMEDIATE TAX FREE FUND
TECHNOLOGY FUND
This Statement of Additional Information relates to the Class A, Class
B and Class C Shares of the funds named above (the "Funds"), each of which is a
series of First American Investment Funds, Inc. ( "FAIF"). This Statement of
Additional Information is not a prospectus, but should be read in conjunction
with the Funds' current Prospectuses dated January 31, 1995. This Statement of
Additional Information is incorporated into the Funds' Prospectuses by
reference. To obtain copies of a Prospectus, write or call the Funds'
administrator SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087, telephone: (800) 637-2548. Please retain this Statement of
Additional Information for future reference.
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION........................... 2
ADDITIONAL INFORMATION CONCERNING
FUND INVESTMENTS............................. 3
Short-Term Investments..................... 3
Repurchase Agreements...................... 3
When-Issued and Delayed-Delivery
Transactions............................ 3
Lending of Portfolio Securities............ 4
Options Transactions....................... 4
Futures and Options on Futures............. 5
Foreign Securities......................... 5
Foreign Currency Transactions.............. 6
Mortgage-Backed Securities................. 7
Debt Obligations Rated Less Than
Investment Grade........................ 8
Special Factors Affecting Minnesota
Insured Intermediate Tax Free
Fund.................................... 9
Special Factors Affecting Colorado
Intermediate Tax Free Fund.............. 10
Insurance for Minnesota Insured
Intermediate Tax Free Fund.............. 13
CFTC Information........................... 14
INVESTMENT RESTRICTIONS....................... 15
DIRECTORS AND EXECUTIVE OFFICERS.............. 18
Directors.................................. 18
Executive Officers......................... 18
Compensation............................... 19
INVESTMENT ADVISORY AND OTHER
SERVICES.................................... 20
Investment Advisory Agreement.............. 20
Sub-Advisory Agreement for
International Fund...................... 21
Administration Agreement................... 22
Distributor and Distribution Plans......... 23
Custodian; Transfer Agent; Counsel;
Accountants............................. 25
PORTFOLIO TRANSACTIONS AND ALLOCATION
OF BROKERAGE............................... 25
CAPITAL STOCK................................. 29
NET ASSET VALUE AND PUBLIC OFFERING
PRICE...................................... 36
FUND PERFORMANCE.............................. 39
SEC Standardized Performance Figures....... 39
Non-Standard Distribution Rates............ 42
Certain Performance Comparisons............ 44
TAXATION...................................... 46
RATINGS....................................... 49
FINANCIAL STATEMENTS.......................... F-1
GENERAL INFORMATION
First American Investment Funds, Inc. ("FAIF") was incorporated in the
State of Maryland on August 20, 1987 under the name "SECURAL Mutual Funds, Inc."
The Board of Directors and shareholders, at meetings held January 10, 1991, and
April 2, 1991, respectively, approved amendments to the Articles of
Incorporation providing that the name "SECURAL Mutual Funds, Inc." be changed to
"First American Investment Funds, Inc."
FAIF is organized as a series fund and currently issues its shares in
21 series. Each series of shares represents a separate investment portfolio with
its own investment objective and policies (in essence, a separate mutual fund).
The series of FAIF to which this Statement of Additional Information relates are
named on the cover hereof. These series are referred to in this Statement of
Additional Information as the "Funds."
Shareholders may purchase shares of each Fund through three separate
classes, Class A, Class B and Class C, which provide for variations in
distribution costs, voting rights and dividends. To the extent permitted by the
Investment Company Act of 1940, the Funds may also provide for variations in
other costs among the classes although they have no present intention to do so.
In addition, a sales load is imposed on the sale of Class A and Class B Shares
of the Funds. Except for differences among the classes pertaining to
distribution costs, each share of each Fund represents an equal proportionate
interest in that Fund. Class A and Class B Shares sometimes are referred to
together as the "Retail Class Shares," and Class C Shares sometimes are referred
to as the "Institutional Class Shares."
FAIF has prepared and will provide Prospectuses relating to the Retail
Class Shares and Prospectuses relating to the Institutional Class Shares of the
Funds. These Prospectuses can be obtained by calling or writing SEI Financial
Management Corporation at the address and telephone number set forth on the
cover of this Statement of Additional Information. This Statement of Additional
Information relates both to the Retail Class Prospectuses and to the
Institutional Class Prospectuses for the Funds. It should be read in conjunction
with the applicable Prospectus.
Equity Income Fund, Diversified Growth Fund and Limited Term Tax Free
Income Fund formerly were series of First American Mutual Funds (previously
known as The Boulevard Funds). They became series of FAIF effective January 31,
1995, by means of an asset acquisition transaction. In addition, effective
January 31, 1995, Limited Term Income Fund acquired the assets of Managed Income
Fund in return for shares of Limited Term Income Fund. Prior to such
transaction, Managed Income Fund also was a series of First American Mutual
Funds.
The Articles of Incorporation and Bylaws of FAIF provide that meetings
of shareholders be held as determined by the Board of Directors and as required
by the 1940 Act. Maryland corporation law requires a meeting of shareholders to
be held upon the written request of shareholders holding 10% or more of the
voting shares of FAIF, with the cost of preparing and mailing the notice of such
meeting payable by the requesting shareholders. The 1940 Act requires a
shareholder vote for all amendments to fundamental investment policies and
restrictions, for approval of all investment advisory contracts and amendments
thereto, and for all amendments to Rule 12b-1 distribution plans.
ADDITIONAL INFORMATION CONCERNING FUND INVESTMENTS
The investment objectives, policies and restrictions of the Funds are
set forth in their respective Prospectuses. Additional information concerning
the investments which may be made by the Funds is set forth under this caption.
Additional information concerning the Funds' investment restrictions is set
forth below under the caption "Investment Restrictions."
SHORT-TERM INVESTMENTS
Most of the Funds can invest in a variety of short-term instruments
which are specified in the respective Prospectuses. A brief description of
certain kinds of short-term instruments follows:
COMMERCIAL PAPER. Commercial paper consists of unsecured promissory
notes issued by corporations. Issues of commercial paper normally have
maturities of less than nine months and fixed rates of return. Subject to the
limitations described in the Prospectuses, the Funds may purchase commercial
paper consisting of issues rated at the time of purchase within the two highest
rating categories by Standard & Poor's Corporation ("Standard & Poor's") or
Moody's Investors Service, Inc. ("Moody's"), or which have been assigned an
equivalent rating by another nationally recognized statistical rating
organization. The Funds also may invest in commercial paper that is not rated
but that is determined by the Adviser to be of comparable quality to instruments
that are so rated. For a description of the rating categories of Standard &
Poor's and Moody's, see "Ratings" herein.
BANKERS ACCEPTANCES. Bankers acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligation both of the bank and of the drawer to
pay the full amount of the instrument upon maturity.
VARIABLE AMOUNT MASTER DEMAND NOTES. Variable amount master demand
notes are unsecured demand notes that permit the indebtedness thereunder to vary
and provide for periodic adjustments in the interest rate according to the terms
of the instrument. Because master demand notes are direct lending arrangements
between a Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, a Fund may demand payment of principal and
accrued interest at any time. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes (which are
normally manufacturing, retail, financial, and other business concerns) must
satisfy the same criteria as set forth above for commercial paper. The Adviser
or Sub-Adviser will consider the earning power, cash flow, and other liquidity
ratios of the issuers of such notes and will continuously monitor their
financial status and ability to meet payment on demand.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements to the extent specified
in their respective Prospectuses. The Funds' custodian will hold the securities
underlying any repurchase agreement, or the securities will be part of the
Federal Reserve/Treasury Book Entry System. The market value of the collateral
underlying the repurchase agreement will be determined on each business day. If
at any time the market value of the collateral falls below the repurchase price
under the repurchase agreement (including any accrued interest), the appropriate
Fund will promptly receive additional collateral (so the total collateral is an
amount at least equal to the repurchase price plus accrued interest).
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
When a Fund agrees to purchase securities on a when-issued or
delayed-delivery basis, the Custodian will set aside cash or liquid securities
equal to the amount of the commitment in a separate account. Normally, the
Custodian will set aside securities to satisfy the purchase commitment, and in
that case, a Fund may be required subsequently to place additional assets in the
separate account in order to assure that the value of the account remains equal
to the amount of the Fund's commitments. It may be expected that a Fund's net
assets will fluctuate to a greater degree when it sets aside securities to cover
such purchase commitments than when it sets aside cash. In addition, because a
Fund will set aside cash or liquid securities to satisfy its purchase
commitments in the manner described above, its liquidity and the ability of the
Adviser to manage it might be affected in the event its commitments to purchase
when-issued or delayed-delivery securities ever exceeded 25% of the value of its
assets. Under normal market conditions, however, a Fund's commitments to
purchase when-issued or delayed-delivery securities will not exceed 25% of the
value of its assets.
LENDING OF PORTFOLIO SECURITIES
When a Fund lends portfolio securities, it must receive 100% collateral
as described in the Prospectuses. This collateral must be valued daily by the
Adviser or Sub-Adviser and, if the market value of the loaned securities
increases, the borrower must furnish additional collateral to the lending Fund.
During the time portfolio securities are on loan, the borrower pays the lending
Fund any dividends or interest paid on the securities. Loans are subject to
termination by the lending Fund or the borrower at any time. While a Fund does
not have the right to vote securities on loan, it would terminate the loan and
regain the right to vote if that were considered important with respect to the
investment.
OPTIONS TRANSACTIONS
OPTIONS ON SECURITIES. To the extent specified in the Prospectuses,
Funds may purchase put and call options on securities and may write covered call
options on securities which they own or have the right to acquire. A Fund may
purchase put options to hedge against a decline in the value of its portfolio.
By using put options in this way, a Fund would reduce any profit it might
otherwise have realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs. In similar fashion, Fund may
purchase call options to hedge against an increase in the price of securities
that the Fund anticipates purchasing in the future. The premium paid for the
call option plus any transaction costs will reduce the benefit, if any, realized
by the Fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire unexercised.
The writer (seller) of a call option has no control over when the
underlying securities must be sold; the writer may be assigned an exercise
notice at any time prior to the termination of the option. If a call option is
exercised, the writer experiences a profit or loss from the sale of the
underlying security. The writer of a call option that wishes to terminate its
obligation may effect a "closing purchase transaction." This is accomplished by
buying an option on the same security as the option previously written. If a
Fund was unable to effect a closing purchase transaction in a secondary market,
it would not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise.
OPTIONS ON STOCK INDICES. Options on stock indices are similar to
options on individual stocks except that, rather than the right to take or make
delivery of stock at a specified price, an option on a stock index gives the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing value of the stock index upon which the option is based is greater
than, in the case of a call, or lesser than, in the case of a put, the exercise
price of the option. This amount of cash is equal to the difference between the
closing price of the index and the exercise price of the option expressed in
dollars times a specified multiple (the "multiplier"). The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. Unlike stock options, all settlements for stock index options are in
cash, and gain or loss depends on price movements in the stock market generally
(or in a particular industry or segment of the market) rather than price
movements in individual stocks. The multiplier for an index option performs a
function similar to the unit of trading for a stock option. It determines the
total dollar value per contract of each point in the difference between the
underlying stock index. A multiplier of 100 means that a one-point difference
will yield $100. Options on different stock indices may have different
multipliers.
OPTIONS ON INTEREST RATE INDICES. An option on an interest rate index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing value of the interest rate index upon which the option is
based is greater than, in the case of a call, or lesser than, in the case of a
put, the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple (the "multiplier"). The
writer of the option is obligated, for the premium received, to make delivery of
this amount. Unlike interest rate futures options contracts, settlements for
interest rate index options are always in cash. Gain or loss depends on price
movements in the interest rate movements with respect to specific financial
instruments. As with stock index options, the multiplier for interest rate index
options determines the total dollar value per contract of each point in the
difference between the exercise price of an option and the current value of the
underlying interest rate index. Options on different interest rate indices may
have different multipliers.
FUTURES AND OPTIONS ON FUTURES
As discussed in the Prospectuses, certain of the Funds may enter into
futures contracts and may purchase options on futures contracts of various
types. These investment techniques are designed primarily to hedge against
anticipated future changes in market conditions or foreign exchange rates which
otherwise might adversely affect the value of securities which a Fund holds or
intends to purchase. The types of futures and options on futures which
particular Funds may utilize are described in the applicable Prospectuses.
At the same time a futures contract is purchased or sold, a Fund
generally must allocate cash or securities as a deposit payment ("initial
deposit"). It is expected that the initial deposit would be approximately 1-1/2%
to 5% of a contract's face value. Daily thereafter, the futures contract is
valued and the payment of "variation margin" may be required, since each day the
Fund would provide or receive cash that reflects any decline or increase in the
contract's value. Futures transactions also involve brokerage costs and require
a Fund to segregate liquid assets, such as cash, United States Government
securities or other liquid high grade debt obligations, to cover its performance
under such contracts.
A Fund may lose the expected benefit of futures transactions if
interest rates, securities prices or foreign exchange rates move in an
unanticipated manner. Such unanticipated changes may also result in poorer
overall performance than if the Fund had not entered into any futures
transactions. In addition, the value of a Fund's futures positions may not prove
to be perfectly or even highly correlated with the value of its portfolio
securities and foreign currencies, limiting the Fund's ability to hedge
effectively against interest rate, foreign exchange rate and/or market risk and
giving rise to additional risks. Because of the low margin requirements in the
futures markets, they may be subject to market forces, including speculative
activity, which do not affect the cash markets. There also is no assurance of
liquidity in the secondary market for purposes of closing out futures positions.
FOREIGN SECURITIES
As described in the applicable Prospectuses, under normal market
conditions International Fund invests principally in foreign securities, and
certain other Funds may invest lesser proportions of their assets in securities
of foreign issuers which are either listed on a United States securities
exchange or represented by American Depositary Receipts.
Fixed commissions on foreign securities exchanges are generally higher
than negotiated commissions on United States exchanges. Foreign markets also
have different clearance and settlement procedures, and in some markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when a portion of the
assets of International Fund is uninvested. In addition, settlement problems
could cause International Fund to miss attractive investment opportunities or to
incur losses due to an inability to sell or deliver securities in a timely
fashion. In the event of a default by an issuer of foreign securities, it may be
more difficult for a Fund to obtain or to enforce a judgment against the issuer.
FOREIGN CURRENCY TRANSACTIONS
As described in the applicable Prospectuses, International Fund may
engage in a variety of foreign currency transactions in connection with its
investment activities. These include forward foreign currency exchange
contracts, foreign currency futures, and foreign currency options.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders (usually large
commercial banks) and their customers. International Fund will not enter into
such forward contracts or maintain a net exposure in such contracts where the
Fund would be obligated to deliver an amount of foreign currency in excess of
the value of the Fund's securities or other assets denominated in that currency.
The Fund will comply with applicable Securities and Exchange Commission
announcements requiring it to segregate assets to cover the Fund's commitments
with respect to such contracts. At the present time, these announcements
generally require a fund with a long position in a forward foreign currency
contract to establish with its custodian a segregated account containing cash or
liquid high grade debt securities equal to the purchase price of the contract,
and require a fund with a short position in a forward foreign currency contract
to establish with its custodian a segregated account containing cash or liquid
high grade debt securities that, when added to any margin deposit, equal the
market value of the currency underlying the forward contract. These requirements
will not apply where a forward contract is used in connection with the
settlement of investment purchases or sales or where the position has been
"covered" by entering into an offsetting position. The Fund generally will not
enter into a forward contract with a term longer than one year.
FOREIGN CURRENCY FUTURES TRANSACTIONS. Unlike forward foreign currency
exchange contracts, foreign currency futures contracts and options on foreign
currency futures contracts are standardized as to amount and delivery period and
may be traded on boards of trade and commodities exchanges or directly with a
dealer which makes a market in such contracts and options. It is anticipated
that such contracts may provide greater liquidity and lower cost than forward
foreign currency exchange contracts. As part of its financial futures
transactions, International Fund may use foreign currency futures contracts and
options on such futures contracts. Through the purchase or sale of such
contracts, the Fund may be able to achieve many of the same objectives as
through forward foreign currency exchange contracts more effectively and
possibly at a lower cost.
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period in the secondary market for such options at
any time prior to expiration.
A foreign currency call option rises in value if the underlying
currency appreciates. Conversely, a foreign currency put option rises in value
if the underlying currency depreciates. While purchasing a foreign currency
option may protect International Fund against an adverse movement in the value
of a foreign currency, it would not limit the gain which might result from a
favorable movement in the value of the currency. For example, if the Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. In such an event, however, the
amount of the Fund's gain would be offset in part by the premium paid for the
option. Similarly, if the Fund entered into a contract to purchase a security
denominated in a foreign currency and purchased a foreign currency call to hedge
against a rise in the value of the currency between the date of purchase and the
settlement date, the Fund would not need to exercise its call if the currency
instead depreciated in value. In such a case, the Fund could acquire the amount
of foreign currency needed for settlement in the spot market at a lower price
than the exercise price of the option.
MORTGAGE-BACKED SECURITIES
As described in the applicable Prospectuses, Mortgage Securites Fund
will invest principally in mortgage-backed securities, and Limited Term Income
Fund, Intermediate Term Income Fund, Fixed Income Fund and Balanced Fund also
may invest in such securities. Each of these Funds will invest only in
mortgage-backed securities which are Agency Pass-Through Certificates or
collateralized mortgage obligations ("CMOs"), as defined and described in those
Prospectuses.
Agency Pass-Through Certificates are issued or guaranteed by the
Government National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC").
GNMA is a wholly-owned corporate instrumentality of the United States within the
Department of Housing and Urban Development. The guarantee of GNMA with respect
to GNMA certificates is backed by the full faith and credit of the United
States, and GNMA is authorized to borrow from the United States Treasury in an
amount which is at any time sufficient to enable GNMA, with no limitation as to
amount, to perform its guarantee.
FNMA is a federally chartered and privately owned corporation organized
and existing under federal law. Although the Secretary of the Treasury of the
United States has discretionary authority to lend funds to FNMA, neither the
United States nor any agency thereof is obligated to finance FNMA's operations
or to assist FBMA in any other manner.
FHLMC is a federally chartered corporation organized and existing under
federal law, the common stock of which is owned by the Federal Home Loan Banks.
Neither the United States nor any agency thereof is obligated to finance FNMA's
operations or to assist FBMA in any other manner.
The residential mortgage loans evidenced by Agency Pass-Through
Certificates and upon which CMOs are based generally are secured by first
mortgages on one- to four-family residential dwellings. Such mortgage loans
generally have final maturities ranging from 15 to 30 years and provide for
monthly payments in amounts sufficient to amortize their original principal
amounts by the maturity dates. Thus, each monthly payment on such mortgage loans
generally includes both an interest component and a principal component, so that
the holder of the mortgage loans receives both interest and a partial return of
principal in each monthly payment. In general, such mortgage loans can be
prepaid by the borrowers at any time without any prepayment penalty. In
addition, many such mortgage loans contain a "due-on-sale" clause requiring the
loans to be repaid in full upon the sale of the property securing the loans.
Because residential mortgage loans generally provide for monthly amortization
and may be prepaid in full at any time, the weighted average maturity of a pool
of residential mortgage loans is likely to be substantially shorter than its
stated final maturity date. The rate at which a pool of residential mortgage
loans is prepaid may be influenced by many factors and is not predictable with
precisions.
As stated in the applicable Prospectuses, CMOs generally are issued in
multiple classes, with holders of each class entitled to receive specified
portions of the principal payments and prepayments and/or of the interest
payments on the underlying mortgage loans. These entitlements can be specified
in a wide variety of ways, so that the payment characteristics of various
classes may differ greatly from one another.
For example:
* In a sequential-pay CMO structure, one class is entitled to receive
all principal payments and prepayments on the underlying mortgage
loans (and interest on unpaid principal) until the principal of the
class is repaid in full, while the remaining classes receive only
interest; when the first class is repaid in full, a second class
becomes entitled to receive all principal payments and prepayments on
the underlying mortgage loans until the class is repaid in full, and
so forth.
* A planned amortization class ("PAC") of CMOs is entitled to receive
principal on a stated schedule to the extent that it is available from
the underlying mortgage loans, thus providing a greater (but not
absolute) degree of certainty as to the schedule upon which principal
will be repaid.
* An accrual class of CMOs provides for interest to accrue and be added
to principal (but not be paid currently) until specified payments have
been made on prior classes, at which time the principal of the accrual
class (including the accrued interest which was added to principal)
and interest thereon begins to be paid from payments on the underlying
mortgage loans.
* As discussed above with respect to Agency Pass-Through Certificates,
an interest-only class of CMOs entitles the holder to receive all of
the interest and none of the principal on the underlying mortgage
loans, while a principal-only class of CMOs entitles the holder to
receive all of the principal payments and prepayments and none of the
interest on the underlying mortgage loans.
* A floating rate class of CMOs entitles the holder to receive interest
at a rate which changes in the same direction and magnitude as changes
in a specified index rate. An inverse floating rate class of CMOs
entitles the holder to receive interest at a rate which changes in the
opposite direction from, and in the same magnitude as or in a multiple
of, changes in a specified index rate. Floating rate and inverse
floating rate classes also may be subject to "caps" and "floors" on
adjustments to the interest rates which they bear.
DEBT OBLIGATIONS RATED LESS THAN INVESTMENT GRADE
As described in the applicable Prospectuses, the "equity securities" in
which Equity Income Fund may invest include corporate debt obligations which are
convertible into common stock. These convertible debt obligations may include
obligations rated as low as CCC by Standard & Poor's or Caa by Moody's or which
have been assigned an equivalent rating by another nationally recognized
statistical rating organization. Debt obligations rated BB, B or CCC by Standard
& Poor's or Ba, B or Caa by Moody's are considered to be less than "investment
grade" and are sometimes referred to as "junk bonds." The limitations on
investments by Equity Income Fund in less than investment grade convertible debt
obligations are set forth in the applicable Prospectuses.
Purchases of less than investment grade corporate debt obligations
generally involve greater risks than purchases of higher rated obligations. Less
than investment grade debt obligations are especially subject to adverse changes
in general economic conditions and to changes in the financial condition of
their issuers. During periods of economic downturn or rising interest rates,
issuers of such obligations may experience financial stress that could adversely
affect their ability to make payments of principal and interest and increase the
possibility of default.
Yields on less than investment grade debt obligations will fluctuate
over time. The prices of such obligations have been found to be less sensitive
to interest rate changes than higher rated obligations, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or period of rising interest rates, highly leveraged issuers
may experience financial stress which could adversely affect their ability to
service principal and interest payment obligations, to meet projected business
goals, and to obtain additional financing. In addition, periods of economic
uncertainty and changes can be expected to result in increased volatility of
market prices of less than investment grade debt obligations.
In addition, the secondary trading market for less than investment
grade debt obligations may be less developed than the market for investment
grade obligations. This may make it more difficult for Equity Income Fund to
value and dispose of such obligations. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of less than investment grade obligations, especially in a
thin secondary trading market.
Certain risks also are associated with the use of credit ratings as a
method for evaluating less than investment grade debt obligations. For example,
credit ratings evaluate the safety of principal and interest payments, not the
market value risk of such obligations. In addition, credit rating agencies may
not timely change credit ratings to reflect current events. Thus, the success of
Equity Income Fund's use of less than investment grade convertible debt
obligations may be more dependent on the Adviser's own credit analysis than is
the case with investment grade obligations.
SPECIAL FACTORS AFFECTING MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
As described in the Prospectuses relating to Minnesota Insured
Intermediate Tax Free Fund, except during temporary defensive periods, this Fund
will invest most of its total assets in Minnesota municipal obligations. In
addition, Limited Term Tax Free Fund may invest up to 50% of its total assets in
obligations of issuers located in Minnesota. These Funds therefore are
susceptible to political, economic and regulatory factors affecting issuers of
Minnesota municipal obligations. The following information provides only a brief
summary of the complex factors affecting the financial situation in Minnesota.
This information is derived from sources that are generally available to
investors and is based in part on information obtained from various state and
local agencies in Minnesota. It should be noted that the creditworthiness of
obligations issued by local Minnesota issuers may be unrelated to the
creditworthiness of obligations issued by the State of Minnesota, and that there
is no obligation on the part of Minnesota to make payment on such local
obligations in the event of default.
MINNESOTA FISCAL CONDITION. Minnesota's constitutionally prescribed
fiscal period is a biennium, and Minnesota operates on a biennial budget basis.
Legislative appropriations for each biennium are prepared and adopted during the
final legislative session of the immediately preceding biennium. Prior to each
fiscal year of a biennium, Minnesota's Department of Finance allots a portion of
the applicable biennial appropriation to each agency or other entity for which
an appropriation has been made. An agency or other entity may not expend moneys
in excess of its allotment. If revenues are insufficient to balance total
available resources and expenditures, Minnesota's Commissioner of Finance, with
the approval of the Governor, is required to reduce allotments to the extent
necessary to balance expenditures and forecasted available resources for the
then current biennium. The Governor may prefer legislative action when a large
reduction in expenditures appears necessary, and if Minnesota's legislature is
not in session the Governor is empowered to convene a special session.
Frequently in recent years, legislation has been required to eliminate
projected budget deficits by raising additional revenue, reducing expenditures,
including aids to political subdivisions and higher education, reducing the
State's budget reserve, imposing a sales tax on purchases by local governmental
units, and making other budgetary adjustments. A budget forecast released by the
Minnesota Department of Finance on December 6, 1994 projects a General Fund
balance of $268 million at the end of the current biennium, June 30, 1995, plus
a budget reserve of $500 million. Total projected expenditures and transfers for
the biennium are $16.9 billion. State law imposes caps on appropriations for
education (including higher education) and human services in the biennium ending
June 30, 1997. It is anticipated as a result of these caps either that spending
in these areas will be reduced below levels needed to maintain current programs
or that other budgetary changes will need to be made by the State for that
biennium. Either approach could result in fiscal difficulties for other
governmental entities in Minnesota. The forecast does not reflect the effects of
a recent decision of the Minnesota Supreme Court that numerous banks are
entitled to refunds of Minnesota bank excise taxes paid for tax years 1979
through 1983. The taxes and interest to be refunded to banks and other
corporations as a result of this decision are estimated to be approximately $327
million. The State will be permitted to pay the refunds over a four-year period,
which would increase interest payments by approximately $24 million. The State
also is party to a variety of other civil actions that could adversely affect
the State's General Fund.
State grants and aids represent a large percentage of the total
revenues of cities, towns, counties and school districts in Minnesota. Even with
respect to bonds that are revenue obligations of the issuer and not general
obligations of Minnesota, there can be no assurance that the fiscal problems
referred to above will not adversely affect the market value or marketability of
the bonds or the ability of the respective obligors to pay interest on and
principal of the bonds.
MINNESOTA ECONOMY. Minnesota relies heavily on a progressive individual
income tax and a retail sales tax for revenue, which results in a fiscal system
unusually sensitive to economic conditions. In 1993, the structure of
Minnesota's economy closely paralleled the structure of the United States
economy as a whole. State employment in ten major sectors was distributed in
approximately the same proportions as national employment.
During the period from 1980 to 1990, overall employment growth in
Minnesota lagged behind national growth; total employment in Minnesota increased
17.9% while increasing 20.5% nationally. Most of Minnesota's relatively slower
growth during this period is associated with declining agricul-tural employment
and with the two recessions in the United States economy occurring in the early
1980s which were more severe in Minnesota than nationwide. Minnesota non-farm
employment growth generally kept pace with the nation after the end of the
1981-82 recession. Employment data through 1993 indicate the recession which
began in July 1990 was less severe in Minnesota than in the national economy.
During 1993 and 1994, the State's monthly unemployment rate was generally less
than the national unemployment rate, averaging 5.1% in 1993, as compared to the
national average of 7.4%.
Since 1980, Minnesota per capita personal income has been within three
percentage points of national per capita personal income. Minnesota per capita
income has generally remained above the national average during this period in
spite of the early 1980s recessions and some difficult years in agriculture. In
1993, Minnesota per capita income was 101.1% of the national average. During
1991-1992, personal income in Minnesota grew more rapidly than the United States
average, with a growth of 5.93% in Minnesota as compared to a United States
average of 5.13%. During 1990-1993, wage and salary disbursements, which
constitute approximately 60% of total personal income, grew 17.3% in Minnesota
as compared to 12.2% for the United States. During the same period, Minnesota
non-agricultural employment increased 2.6%, compared to a national decline in
non-agricultural employment of 0.8%.
Between 1983 and 1992, increases in retail sales in Minnesota averaged
5.9% per year, compounded.
There can be no assurance that Minnesota's economy and fiscal condition
will not materially change in the future or that future difficulties will not
occur. Economic difficulties and the resultant impact on state and local
government finances may adversely affect the market value of obligations in the
portfolio of Minnesota Insured Intermediate Tax Free Fund or the ability of
respective obligors to make timely payment of the principal and interest on such
obligations.
SPECIAL FACTORS AFFECTING COLORADO INTERMEDIATE TAX FREE FUND
As described in the Prospectuses relating to Colorado Intermediate Tax
Free Fund, except during temporary defensive periods, this Fund will invest most
of its total assets in Colorado municipal obligations. Colorado Intermediate Tax
Free Fund therefore is susceptible to political, economic and regulatory factors
affecting issuers of Colorado municipal obligations. The following information
provides only a brief summary of the complex factors affecting the financial
situation in Colorado. This information is derived from sources that are
generally available to investors and is based in part on information obtained
from various state and local agencies in Colorado. It should be noted that the
creditworthiness of obligations issued by local Colorado issuers may be
unrelated to the creditworthiness of obligations issued by the State of
Colorado, and that there is no obligation on the part of Colorado to make
payment on such local obligations in the event of default.
COLORADO FISCAL CONDITION. The Colorado Constitution allocates to the
General Assembly legislative responsibility for appropriating State moneys to
pay the expenses of State government. The fiscal year of the State is the
12-month period commencing July 1 and ending June 30. During the fiscal year for
which appropriations have been made, the General Assembly may increase or
decrease appropriations through supplementary appropriations.
State general fund tax collections for fiscal year 1993-94 increased
4.4% over fiscal year 1992-93 to reach $3,601.5 million. The current estimate
for fiscal year 1994-95 is $3,753.2 million, or an increase of 4.2%. State cash
funds, which consists of a variety of program revenues, totalled $1,630.0
million for fiscal year 1993-94, and are estimated to increase 4.7% for fiscal
year 1994-95 to $1,707.3 million.
The State Constitution requires that expenditures for any fiscal year
not exceed revenues for such fiscal year. In addition, Article X, Section 20, of
the State Constitution (see "-- Recently Adopted State Constitutional Amendment"
below) limits increases in expenditures of state general funds and cash revenues
from year to year to the sum of State inflation plus the percentage change in
population (adjusted for revenue changes approved by voters). Expenditures in
fiscal year 1994-95 are limited to an increase of no more than 7.1% over 1993-94
expenditures. (The 7.1% increase factor is equal to the sum of 1993 inflation,
4.2%, and population growth, 2.9%.) Based upon total general fund tax
collections and state cash revenues for fiscal year 1993-94 of $5,231.5 million,
expenditures for fiscal year 1994-95 will be limited to $5,602.9 million.
RECENTLY ADOPTED STATE CONSTITUTIONAL AMENDMENT. On November 3, 1992,
the voters of Colorado approved a constitutional amendment, known informally as
"Amendment One," which adds a new Section 20 to Article X of the Colorado
Constitution. Amendment One contains limitations on the ability of "Districts,"
which are defined as Colorado State and local governments, to increase taxes and
issue debt obligations, as well as limitations on spending and revenue
generation. The amendment does not apply to "Enterprises," which are defined as
government-owned businesses that are authorized to issue their own revenue bonds
and that receive under 10% of annual revenues in grants from all state and local
governments combined.
Amendment One limits the ability of Districts to increase taxes by
providing that advance voter approval is required for "any new tax, tax rate
increase, mill levy above that for the prior year, valuation for assessment
ratio increase for a property class, or extension of an expiring tax, or a tax
policy change directly causing a net tax revenue gain to any district." An
additional limitation is placed on the maximum annual percentage increase in
property tax revenue.
Amendment One also imposes new limitations on government borrowing. The
amendment provides that Districts must have advance voter approval for the
"creation of any multiple-fiscal year direct or indirect district debt or other
financial obligation whatsoever without adequate present cash reserves pledged
irrevocably and held for payments in all future fiscal years," except for
refinancing District bonded debt at a lower interest rate or adding new
employees to existing District pension plans. Prior to the adoption of Amendment
One, voter approval was generally required only for the creation of general
obligation debt.
Spending limitations applicable to the State and separately to local
governments are also included in Amendment One. The amendment provides that the
maximum annual percentage change in each local District's Fiscal Year Spending
shall equal inflation in the prior calendar year plus annual local growth,
adjusted for revenue changes approved by voters after 1991 and certain other
allowed adjustments. "Fiscal Year Spending" is defined as all District
expenditures and reserve increases except refunds made in the current or next
fiscal year, gifts, federal funds, collections for another government, pension
contributions by employees and pension fund earnings, reserve transfers or
expenditures, damage awards and property sales. If revenue from sources not
excluded from Fiscal Year Spending exceeds the spending limit for a fiscal year,
Amendment One provides that the excess must be refunded in the next fiscal year
unless voters approve a revenue change as an offset.
Elections required under Amendment One are limited to the State general
election (the first Tuesday after the first Monday in November in even numbered
years), an election held on the first Tuesday in November in odd numbered years,
or the regular biennial election of the local government.
While it is too early to determine what impacts Amendment One will
ultimately have on the financial operations of Colorado state and local
governments, the new constraints on budgetary and debt management flexibility
may create credit concerns. Furthermore, the language of Amendment One is not
clear as to certain matters, including (a) whether property tax rates can be
increased without voter approval to support outstanding or refunding general
obligation bonds, (b) whether new lease rental bonds and certificates of
participation constitute multiple-year financial obligations within the context
of the amendment, and (c) the precise definition of exempt Enterprises. A number
of Colorado courts have rendered decisions regarding various provisions of
Amendment One since its passage. However, there are still many uncertainties as
to the appropriate construction of certain provisions of Amendment One. In view
of the fact that no appellate court has ruled on Amendment One comprehensively,
there can still be no assurrance as to the appropriate construction of certain
provisions of Amendment One.
COLORADO ECONOMY. Since 1960, the Colorado economy has moved generally
with the cycles of the national economy, while experiencing greater growth than
the national economy during upturns and more gradual declines during downturns.
During this period, structural changes have transformed both the United States
and the State economies. At the national level, the number of basic industry
jobs (mining, manufacturing and construction) declined substantially as a
percentage of the total private industry work force -- 44.6% in 1960 to 23.6% in
1989, while at the State level, the number of basic industry jobs declined from
26.5% in 1960 to 18.4% in 1989. The difference in the rate of decline can be
attributed to the State's industrial mix, which excludes many industries such as
automobile, steel and textile manufacturing that experienced the steepest
national declines.
The sustained economic growth Colorado achieved during the 1960s and
1970s was curtailed by the national recession in 1974 and 1975, reflecting the
State's general movement with the United States' economy. The recession produced
marked declines in employment and income growth in the State, although at rates
lower than the national economy.
The Colorado economy rebounded strongly in the late 1970s. As a result
of energy price increases in 1979 and 1980, job expansion in oil and mineral
extraction industries accelerated. Expansion in the oil industry resulted in
growth in related services and employment which stimulated, in part, substantial
increases in nonresidential construction in the Denver metropolitan area.
During the second half of 1985, the performance of Colorado's economy
was adversely affected primarily because three sectors of the local economy
suffered setbacks at the same time. First, the energy sector contracted during
each of the preceding five years due, in part, to price decreases of imported
oil resulting in less domestic oil production. Domestic exploration, and, in
some cases, production, had become unprofitable. This trend was reflected in
cutbacks in both oil and gas and mineral extraction industry employment. Second,
a major high technology manufacturer (Storage Technology Corporation) laid off
nearly 5,000 workers during 1984 and 1985. The high-technology industry
generally declined due to overexpansion which produced keen price competition.
Third, after years of healthy growth, excess supply in both residential and
nonresidential construction sectors decreased employment in the construction
sector. In the nonresidential sector, this over-building occurred partially as a
result of the downturn in oil industry employment, which reduced demand for
office space. In the residential sector, the excess supply of housing resulted
from a sharp reduction in in-migration and over-building.
The Colorado economy began to recover and showed positive signs of
growth in 1987, which became more evident in the following years. More recently,
the national recession and the restructuring of the defense industry have
affected the State economy. However, at the end of 1993, the State economy
appeared somewhat healthier than the national economy, based on a number of
economic indicators. In 1993, 51,000 new non-agricultural wage and salary jobs
were added to the economy, representing a job growth rate of 3.2%. This compares
to a 1993 job growth rate of 1.6% nationally. Job growth is currently expected
to reach 1.9% in 1994. Colorado's unemployment rate decreased from 5.9% in 1992
to 5.4% in 1993, and remains significantly below the 1993 national unemployment
rate of 6.8%. The Colorado unemployment rate is expected to measure between 5.5%
and 5.8% between 1994 and 1996.
In 1993, Colorado had one of the fastest growing economies in the
nation as measured by gains in personal income. Total personal income in 1994 is
estimated by the State to be $81.4 billion, an increase of 6.2% compared to
1993. During 1993, total United States personal income was estimated to have
increased 4.9%. Preliminary estimates for Colorado personal income predict an
annual growth rate of approximately 6.6% for 1995.
Total population in Colorado increased by 101,282 in 1993 over 1992,
corresponding to a growth rate of 2.9%. This increase was the highest rate of
population growth for the State in 11 years. The preliminary estimate for total
population increase for 1994 is 2.8%. Inflation for 1993 measured 4.4%, versus
3.7% in 1992.
INSURANCE FOR MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
Minnesota Insured Fund is authorized to obtain Portfolio Insurance from
insurers that have obtained a claims-paying ability of "AAA" (or a short-term
rating of "SP-1") from Standard & Poor's or "Aaa" (or a short-term rating of
"MIG-1") from Moody's or an equivalent rating from another nationally recognized
statistical rating organization. Such insurers may include AMBAC Indemnity
Corporation ("AMBAC"), Municipal Bond Investors Assurance Corporation ("MBIA"),
Financial Guaranty Insurance Company ("FGIC"), Financial Security Assurance,
Inc. ("FSA"), or other companies meeting the foregoing criteria.
Any Portfolio Insurance policy obtained by Minnesota Insured Fund would
be effective only so long as Minnesota Insured Fund is in existence, the insurer
is still in business and the municipal obligations described in the policy
continue to be held by Minnesota Insured Fund. In the event of a sale of any
municipal obligation by Minnesota Insured Fund or payment thereof prior to
maturity, a Portfolio Insurance policy would terminate as to such municipal
obligation on the settlement date of the sale or the redemption date.
Under a Portfolio Insurance policy, the insurer would unconditionally
guarantee to Minnesota Insured Fund the timely payment of principal and interest
on the municipal obligations as such payments become due but are not paid by the
issuer, except that in the event of any acceleration of the due date of the
principal by reason of mandatory or optional redemption or acceleration
resulting from default or otherwise, other than any advancement of maturity
pursuant to a mandatory sinking fund payment, the payments guaranteed will be
made in such amounts and at such times as payments of principal would have been
due and there had not been any such acceleration. Such a policy would not insure
against loss of any prepayment premium that may at any time be payable with
respect to any municipal obligation. It also would not insure against loss
relating to: (i) optional or mandatory redemptions (other than mandatory sinking
fund redemptions); (ii) any payments to be made on an accelerated basis; (iii)
payments of the purchase price of municipal obligations upon tender by an owner
thereof; or (iv) any preference relating to (i) through (iii) above. It also
would not insure against nonpayment of principal of or interest on the municipal
obligations resulting from the insolvency, negligence or any other act or
omission of the paying agent for the municipal obligations.
AMBAC is a Wisconsin-domiciled stock insurance corporation regulated by
the Office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia and the
Commonwealth of Puerto Rico, with admitted assets (unaudited) of approximately
$2.060 billion and statutory capital (unaudited) of approximately $1.178 billion
as of June 30, 1994. Statutory capital consists of AMBAC's statutory contingency
reserve and policyholders' surplus. Copies of AMBAC's financial statements
prepared in accordance with statutory accounting standards are available from
AMBAC. The address of AMBAC's administrative offices is One State Street Plaza,
17th Floor, New York, New York 10004.
MBIA is a limited liability corporation domiciled in the State of New
York and licensed to do business in all 50 states, the District of Columbia and
the Commonwealth of Puerto Rico. As of June 30, 1994, MBIA had admitted assets
of $3.3 billion (unaudited), total liabilities of $2.2 billion (unaudited) and
total capital and surplus of $1.1 billion (unaudited) determined in accordance
with statutory accounting principles prescribed or permitted by insurance
regulatory authorities. Copies of MBIA's year end financial statements are
available from MBIA. The address of MBIA is 113 King Street, Armonk, New York
10504.
FGIC is a monoline financial guaranty insurer domiciled in the State of
New York and subject to regulation by the State of New York Insurance
Department. As of September 30, 1993, the total capital and surplus of FGIC was
approximately $744.7 million. FGIC prepares financial statements on the basis of
both statutory accounting principles and generally accepted accounting
principles. Copies of such financial statements may be obtained by writing to
FGIC at 115 Broadway, New York, New York 10006, Attention:
Communications Department.
FSA is a monoline insurance company incorporated under the laws of the
State of New York. FSA is licensed directly or through its subsidiaries to
engage in financial guaranty insurance business in all 50 states, the District
of Columbia, Puerto Rico and the United Kingdom. As of June 30, 1994 the total
policyholders' surplus and contingency reserves and the total unearned premium
reserve, respectively, of FSA and its consolidated subsidiaries were, in
accordance with statutory accounting principles, approximately $475.8 million
(unaudited) and $232.9 million (unaudited), and the total shareholders' equity
and total unearned premium reserve, respectively, of FSA and its consolidated
subsidiaries were, in accordance with generally accepted accounting principles,
approximately $530.0 million (unaudited) and $206.0 million (unaudited). The
principal executive offices of FSA are located at 350 Park Avenue, New York, New
York 10022.
The information relating to AMBAC, MBIA, FGIC and FSA set forth above
has been obtained from publicly available sources. No representation is made as
to the accuracy or adequacy of such information.
CFTC INFORMATION
The Commodity Futures Trading Commission (the "CFTC"), a federal
agency, regulates trading activity pursuant to the Commodity Exchange Act, as
amended. The CFTC requires the registration of "commodity pool operators," which
are defined as any person engaged in a business which is of the nature of an
investment trust, syndicate or a similar form of enterprise, and who, in
connection therewith, solicits, accepts or receives from others funds,
securities or property for the purpose of trading in any commodity for future
delivery on or subject to the rules of any contract market. The CFTC has adopted
Rule 4.5, which provides an exclusion from the definition of commodity pool
operator for any registered investment company which (i) will use commodity
futures or commodity options contracts solely for bona fide hedging purposes
(provided, however, that in the alternative, with respect to each long position
in a commodity future or commodity option contract, an investment company may
meet certain other tests set forth in Rule 4.5); (ii) will not enter into
commodity futures and commodity options contracts for which the aggregate
initial margin and premiums exceed 5% of its assets; (iii) will not be marketed
to the public as a commodity pool or as a vehicle for investing in commodity
interests; (iv) will disclose to its investors the purposes of and limitations
on its commodity interest trading; and (v) will submit to special calls of the
CFTC for information. Any investment company desiring to claim this exclusion
must file a notice of eligibility with both the CFTC and the National Futures
Association. FAIF has made such notice filings with respect to those Funds which
may invest in commodity futures or commodity options contracts.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies set forth in the
Prospectuses and under the caption "Additional Information Concerning Fund
Indvestment" above, each of the Funds is subject to the investment restrictions
set forth below. The investment restrictions set forth in paragraphs 1 through 9
below are fundamental and cannot be changed with respect to a Fund without
approval by the holders of a majority of the outstanding shares of that Fund as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"),
i.e., by the lesser of the vote of (a) 67% of the shares of the Fund present at
a meeting where more than 50% of the outstanding shares are present in person or
by proxy, or (b) more than 50% of the outstanding shares of the Fund.
None of the Funds will:
1. Except for Limited Term Tax Free Income Fund, Intermediate Tax Free
Fund, Minnesota Insured Intermediate Tax Free Fund, and Colorado
Intermediate Tax Free Fund (collectively, the "Tax Free Funds") and
for Technology Fund, invest in any securities if, as a result, 25% or
more of the value of its total assets would be invested in the
securities of issuers conducting their principal business activities
in any one industry. Neither Limited Term Tax Free Fund nor
Intermediate Tax Free Fund will invest 25% or more of the value of its
total assets in obligations of issuers located in the same state (for
this purpose, the location of an "issuer" shall be deemed to be the
location of the entity the revenues of which are the primary source of
payment of the location of the project or facility which may be the
subject of the obligation). None of the Tax Free Funds will invest 25%
or more of the value of its total assets in revenue bonds or notes,
payment for which comes from revenues from any one type of activity
(for this purpose, the term "type of activity" shall include without
limitation (i) sewage treatment and disposal; (ii) gas provision;
(iii) electric power provision; (iv) water provision; (v) mass
transportation systems; (vi) housing; (vii) hospitals; (viii) nursing
homes; (ix) street development and repair; (x) toll roads; (xi)
airport facilities; and (xii) educational facilities), except that, in
circumstances in which other appropriate available investments may be
in limited supply, such Funds may invest without limitation in gas
provision, electric power provision, water provision, housing and
hospital obligations. This restriction does not apply to general
obligation bonds or notes or, in the case of Intermediate Tax Free
Fund, to pollution control revenue bonds. However, in the case of the
latter Fund, it it anticipated that normally (unless there are
unusually favorable interest and market factors) less than 25% of such
Fund's total assets will be invested in pollution control bonds. This
restriction does not apply to securities of the United States
Government or its agencies and instrumentalities or repurchase
agreements relating thereto.
2. Issue any senior securities (as defined in the 1940 Act), other than
as set forth in restriction number 3 below and except to the extent
that using options or purchasing securities on a when-issued basis may
be deemed to constitute issuing a senior security.
3. Borrow money, except from banks for temporary or emergency purposes.
The amount of such borrowing may not exceed 10% of the borrowing
Fund's total assets, except for Asset Allocation Fund, which may
borrow in amounts not to exceed 33-1/3% of its total assets. None of
the Funds will borrow money for leverage purposes. For the purpose of
this investment restriction, the use of options and futures
transactions and the purchase of securities on a when-issued or
delayed-delivery basis shall not be deemed the borrowing of money. (As
a non-fundamental policy, no Fund will make additional investments
while its borrowings exceed 5% of total assets.)
4. Mortgage, pledge or hypothecate its assets, except in an amount not
exceeding 15% of the value of its total assets to secure temporary or
emergency borrowing.
5. Make short sales of securities.
6. Purchase any securities on margin except to obtain such short-term
credits as may be necessary for the clearance of transactions and
except, in the case of Emerging Growth Fund, Technology Fund,
International Fund and Limited Volatility Stock Fund, as may be
necessary to make margin payments in connection with foreign currency
futures and other derivative transactions.
7. Purchase or sell physical commodities (including, by way of example
and not by way of limitation, grains, oilseeds, livestock, meat, food,
fiber, metals, petroleum, petroleum-based products or natural gas) or
futures or options contracts with respect to physical commodities.
This restriction whall not restrict any Fund from purchasing or
selling any financial contracts or instruments which may be deemed
commodities (including, by way of example and not by way of
limitation, options, futures and options on futures with respect, in
each case, to interest rates, currencies, stock indices, bond indices
or interest rate indices) or any security which is collateralized or
otherwise backed by physical commodities.
8. Purchase or sell real estate or real estate mortgage loans, except
that the Funds may invest in securities secured by real estate or
interest therein or issued by companies that invest in or hold real
estate or interests therein, and except that Intermediate Government
Bond Fund, Intermediate Tax Free Fund, Fixed Income Fund, Intermediate
Term Income Fund, Limited Term Income Fund, Balanced Fund, Asset
Allocation Fund, Mortgage Securities Fund, Minnesota Insured
Intermediate Tax Free Fund, Colorado Intermediate Tax Free Fund,
Emerging Growth Fund, Technology Fund, International Fund, and Limited
Volatility Stock Fund may invest in mortgage-backed securities.
9. Act as an underwriter of securities of other issuers, except to the
extent a Fund may be deemed to be an underwriter, under Federal
securities laws, in connection with the disposition of portfolio
securities.
The following restrictions are non-fundamental and may be changed by
FAIF's Board of Directors without shareholder vote. None of the Funds will:
10. Invest more than 15% of its net assets in all forms of illiquid
investments, as determined pursuant to applicable Securities and
Exchange Commission rules and interpretations.
11. Invest in any securities, if as a result more than 5% of the value of
its total assets is invested in the securities of any issuers which,
with their predecessors, have a record of less than three years
continuous operation. (Securities of any of such issuers will not be
deemed to fall within this limitation if they are guraranteed by an
entity which has bee in continuous operation for more than three
years.)
12. Invest for the purpose of exercising control or management.
13. Purchase or sell real estate limited partnership interests, or oil,
gas or other mineral leases, rights or royalty contracts, except that
the Funds may purchase or sell securities of companies which invest in
or hold the foregoing.
14. Purchase securities of any other registered investment company (as
defined in the 1940 Act), except, subject to 1940 Act limitations, (a)
the Tax Free Funds may purchase shares of open-end investment
companies investing primarily in municipal obligations with remaining
maturities of 13 months or less; (b) International Fund may purchase
shares of open-end investment companies which invest in permitted
investments for such Fund; (c) each of Stock Fund, Equity Index Fund,
Balanced Fund, Limited Volatility Stock Fund, Asset Allocation Fund,
Equity Income Fund, Diversified Growth Fund, Emerging Growth Fund,
Regional Equity Fund, Special Equity Fund, Technology Fund, and
International Fund may, as part of its investment in cash items,
invest in securities of other mutual funds which invest primarily in
debt obligations with remaining maturities of 13 months or less; and
(d) all Funds may purchase securities as part of a merger,
consolidation, reorganization or acquisition of assets. Further, so
long as its shares are registered for sale in the state of California,
Intermediate Tax Free Fund will invest in securities of other open-end
investment companies primarily for the purpose of investing short-term
cash on a temporary basis; in addition, the Fund will waive its
advisory fee on any portion of its assets invested in other open-end
investment companies.
15. Lend any of their assets, except portfolio securities representing up
to one-third of the value of their total assets.
16. Invest in foreign securities, except that (a) Limited Term Income
Fund, Intermediate Term Income Fund, and Fixed Income Fund each may
invest up to 15% of its total assets in foreign securities payable in
United States Dollars; (b) Stock Fund, Balanced Fund, Limited
Volatility Stock Fund, Equity Income Fund, Diversified Growth Fund,
Emerging Growth Fund, Special Equity Fund, and Technology Fund each
may invest may invest up to 25% of its total assets in securities of
foreign issuers which are either listed on a United States stock
exchange or represented by American Depositary Receipts; and (c)
International Fund may invest in foreign securities without
limitation.
17. Except for International Fund, invest in warrants; provided, that the
other Funds except for the Tax Free Funds may invest in warrants in an
amount not exceeding 5% of a Fund's net assets. No more than 2% of
this 5% may be warrants which are not listed on the New York Stock
Exchange.
For determining compliance with its investment restriction relating to
industry concentration, each Fund classifies asset-backed securities in its
portfolio in separate industries based upon a combination of the industry of the
issuer or sponsor and the type of collateral. The industry of the issuer or
sponsor and the type of collateral will be determined by the Adviser. For
example, an asset-backed security known as "Money Store 94D A2" would be
classified as follows: the issuer or sponsor of the security is The Money Store,
a personal finance company, and the collateral underlying the security is
automobile receivables. Therefore, the industry classification would be Personal
Finance Companies -- Automobile. Similarly, an asset-backed security known as
"Midlantic Automobile Grantor Trust 1992-1 B" would be classified as follows:
the issuer or sponsor of the security is Midlantic National Bank, a banking
organization, and the collateral underlying the security is automobile
receivables. Therefore, the industry classification would be Banks --
Automobile. Thus, an issuer or sponsor may be included in more than one
"industry" classification, as may a particular type of collateral.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of FAIF are listed below, together
with their business addresses and their principal occupations during the past
five years. Mr. Eastman and Mr. Kedrowski are "interested directors" (as that
term is defined in the 1940 Act) of FAIF.
DIRECTORS
Robert J. Dayton, 5140 Norwest Center, Minneapolis, Minnesota 55402:
Director of FAIF since September 1994 and of First American Funds, Inc. ("FAF")
since December 1994; Chairman (1989-1993) and Chief Executive Officer
(1993-present), Okabena Company (private family investment office).
Welles B. Eastman, 998 Shady Lane, Wayzata, Minnesota 55391: Director
of FAF since January 1990 and of FAIF since April 1991; Chairman of the Board of
Directors of Annandale State Bank, Annandale, Minnesota; Vice President of the
Adviser from 1968 and Vice President of the Institutional Trust Group of First
Trust National Association from 1986 until his retirement in December 1988 from
such positions.
Irving D. Fish, Fallon McElligott, Inc., 901 Marquette, Suite 3200,
Minneapolis, Minnesota 55402: Director of FAF since 1984 and of FAIF since April
1991; Partner and Chief Financial Officer of Fallon McElligott, Inc., a
Minneapolis-based advertising agency.
Leonard W. Kedrowski, 16 Dellwood Avenue, Dellwood, Minnesota 55110:
Director of FAIF and FAF since November 1993; Vice President, Chief Financial
Officer, Treasurer, Secretary and Director of Anderson Corporation from 1983 to
October 1992.
Joseph D. Strauss, 8617 Edenbrook Crossing, # 443, Brooklyn Park,
Minnesota 55443: Director of FAF since 1984 and of FAIF since April 1991;
Chairman of FAF's and FAIF's Boards since 1992; President of FAF and FAIF from
June 1989 to November 1989; Owner and President, Strauss Management Company,
since 1993; Owner and President, Community Resource Partnerships, Inc. since
1992; attorney-at-law.
Virginia L. Stringer, 712 Linwood Avenue, St. Paul, Minnesota 55105:
Director of FAIF since August 1987 and of FAF since April 1991; Management
Consultant; former President and Director of The Inventure Group, Inc., a
management consulting and training company, since August 1991; President of
Scott's Consulting, Inc., a management consulting company, from 1989 to 1991;
President of Scott's, Inc., a transportation company, from 1989 to 1990; Vice
President of Human Resources of The Pillsbury Company, a food manufacturing
company, from 1981 to 1989.
Gae B. Veit, P.O. Box 6, Loretto, Minnesota 55357: Director of FAIF and
FAF since December 7, 1993; owner and CEO of Shingobee Builders, Inc., a general
contractor.
EXECUTIVE OFFICERS
David Lee, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: President of FAIF and FAF since April 1994; Senior Vice
President and Assistant Secretary of FAF and FAIF beginning June 1, 1993; Senior
Vice President of SEI Financial Services Company (the "Distributor") since 1991;
President, GW Sierra Trust Funds prior to 1991.
Carmen V. Romeo, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: Treasurer and Assistant Secretary of FAIF and FAF beginning
November 1992; Director, Executive Vice President, Chief Financial Officer and
Treasurer of SEI Corporation ("SEI"), SEI Financial Management Corporation (the
"Administrator") and the Distributor since 1981.
Kevin P. Robins, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: Vice President and Assistant Secretary of FAIF and FAF since
April 1994; Vice President, Assistant Secretary and General Counsel of the
Administrator and the Distributor.
Kathryn Stanton, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: Vice President and Assistant Secretary of FAIF and FAF since
April 1994; Vice President and Assistant Secretary of the Administrator and the
Distributor since April 1994; Associate, Morgan, Lewis & Bockius, from 1989 to
1994.
Sandra K. Orlow, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: Vice President and Assistant Secretary of FAIF and FAF since
1992; Vice President and Assistant Secretary of SEI, the Administrator and the
Distributor since 1983.
Robert B. Carroll, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: Vice President and Assistant Secretary of FAIF and FAF since
September 1994; Vice President and Assistant Secretary of SEI, the Administrator
and the Distributor since 1994; Division of Investment Management, United States
Securities and Exchange Commission, from 1990 to 1994; Associate, McGuire,
Woods, Brattle & Boothe, before 1990.
Jean Young, SEI Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087: Controller of FAIF and FAF since June 1994; Director of
Domestic Funds Accounting of the Administrator since 1993; Senior Audit Manager,
Ernst & Young, prior to 1993.
Michael J. Radmer, 220 South Sixth Street, Minneapolis, Minnesota
55402: Secretary of FAIF since April 1991 and of FAF since 1981; Partner, Dorsey
& Whitney P.L.L.P., a Minneapolis-based law firm and general counsel of FAIF and
FAF.
COMPENSATION
The First American Family of Funds, which includes FAIF and FAF,
currently pays only to directors of the funds who are not paid employees or
affiliates of the funds a fee of $8,400 per year plus $1,400 ($2,800 in the case
of the Chairman) per meeting of the Board attended and $400 per committee
meeting attended and reimburses travel expenses of directors and officers to
attend Board meetings. Legal fees and expenses are also paid to Dorsey & Whitney
P.L.L.P., the law firm of which Michael J. Radmer, secretary of FAIF and FAF, is
a partner.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENT
First Bank National Association (the "Adviser"), 601 Second Avenue
South, Minneapolis, Minnesota 55480, serves as the investment adviser and
manager of the Funds. The Adviser is a national banking association that has
professionally managed accounts for individuals, insurance companies,
foundations, commingled accounts, trust funds, and others for over 75 years. The
Adviser is a subsidiary of First Bank System, Inc. ("FBS"), 601 Second Avenue
South, Minneapolis, Minnesota 55480, which is a regional bank holding company
headquartered in Minneapolis, Minnesota. FBS is comprised of 9 banks and several
trust and nonbank subsidiaries, with 220 offices primarily in Minnesota,
Colorado, Illinois, Montana, North Dakota, South Dakota and Wisconsin. Through
its subsidiaries, FBS provides commercial and agricultural finance, consumer
banking, trust, capital markets, cash management, investment management, data
processing, leasing, mortgage banking and brokerage services.
Pursuant to an Investment Advisory Agreement dated April 2, 1991 (the
"Advisory Agreement"), the Funds engage the Adviser to act as investment adviser
for and to manage the investment of the assets of the Funds. Each Fund other
than International Fund pays the Adviser monthly fees calculated on an annual
basis equal to 0.70% of of its average daily net assets. International Fund pays
the Adviser monthly fees calculated on an annual basis equal to 1.25% of of its
average daily net assets.
Prior to August 1994, the Advisory Agreement provided for Intermediate
Government Bond Fund, Intermediate Tax Free Fund and Fixed Income Fund to pay an
advisory fee calculated on an annual basis as a percentage of average daily net
assets of 0.50% on the first $100 million of net assets, 0.40% on the next $150
million of net assets and 0.30% on net assets of over $250 million, and for
Stock Fund and Special Equity Fund to pay an advisory fee calculated on such
basis of 0.70% on the first $100 of net assets, 0.60% on the next $150 million
of net assets, 0.50% on the next $250 million of net assets and 0.40% on net
assets of over $500 million. Prior to March 28, 1994, Diversified Growth Fund,
Equity Income Fund and Limited Term Tax Free Income Fund were advised by
Boulevard Bank National Association pursuant to an investment advisory agreement
which provided for such Funds to pay annual advisory fees equal to 0.75%, 0.75%
and 0.70% of their respective average daily net assets.
The Advisory Agreement requires the Adviser to provide FAIF with all
necessary office space, personnel and facilities necessary and incident to the
Adviser's performance of its services thereunder. The Adviser is responsible for
the payment of all compensation to personnel of FAIF and the officers and
directors of FAIF, if any, who are affiliated with the Adviser or any of its
affiliates. The Advisory Agreement provides that each Fund will be reimbursed by
the Adviser, in an amount not in excess of the advisory fees payable by such
Fund, for excess fund expenses as may be required by the laws of certain states
in which the Fund's shares may be offered for sale. As of the date of this
Statement of Additional Information, the most restrictive state limitation in
effect requires that "aggregate annual expenses" (which include the investment
advisory fee and other operating expenses but exclude interest, taxes, brokerage
commissions, Rule 12b-1 fees and certain other expenses) shall not exceed 2-1/2%
of the first $30 million of average net assets, 2% of the next $70 million of
average net assets and 1-1/2% of the remaining average net assets of a Fund for
any fiscal year.
In addition to the investment advisory fee, each Fund pays all its
expenses that are not expressly assumed by the Adviser or any other organization
with which the Fund may enter into an agreement for the performance of services.
Each Fund is liable for such nonrecurring expenses as may arise, including
litigation to which the Fund may be a party, and it may have an obligation to
indemnify its directors and officers with respect to such litigation.
For the fiscal year ended September 30, 1992, the Adviser waived all of
its advisory fees with respect to all of the Funds in operation during such
year. The following table sets forth total advisory fees before waivers and
after waivers for each of the Funds for the fiscal years ended September 30,
1993 (for all Funds other than Equity Income Fund, Diversified Growth Fund and
Limited Term Income Fund, whose first fiscal year ended November 30, 1993, and
subsequently changed to September 30) and September 30, 1994:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1993 SEPTEMBER 30, 1994
ADVISORY FEE ADVISORY FEE ADVISORY FEE ADVISORY FEE
BEFORE WAIVERS AFTER WAIVERS BEFORE WAIVERS AFTER WAIVERS
<S> <C> <C> <C> <C>
Stock Fund...................... $616,128 $378,696 $925,957 $629,919
Equity Index Fund............... 670,126 35,467 1,076,404 108,274
Balanced Fund................... 470,319 285,727 888,066 559,105
Limited Volatility Stock
Fund....................... * * * *
Asset Allocation Fund........... 304,187 185,599 374,173 214,891
Equity Income Fund.............. 180,729 60,243 141,151 44,517
Diversified Growth Fund......... 205,299 100,976 169,473 72,518
Emerging Growth Fund............ * * 13,599 4,028
Regional Equity Fund............ 250,580 165,919 579,368 398,939
Special Equity Fund............. 380,240 247,718 737,795 515,305
Technology Fund................. * * 11,299 4,118
International Fund.............. * * 187,599 147,778
Limited Term Income
Fund....................... 697,257 292,743 673,117 303,024
Intermediate Term Income
Fund....................... 321,613 170,703 444,603 193,338
Fixed Income Fund............... 188,427 123,243 338,471 201,828
Intermediate Government
Bond Fund.................. 9,422 (8,730) 36,960 (3,017)
Mortgage Securities Fund........ 135,635 63,451 224,720 91,015
Limited Term Tax Free
Income Fund................ 83,941 7,250 106,568 15,665
Intermediate Tax Free
Fund....................... 8,249 (10,393) 19,253 (5,438)
Minnesota Insured Inter-
mediate Tax Free Fund...... * * 42,710 17,871
Colorado Intermediate Tax
Free Fund.................. * * 6,400 4,762
</TABLE>
* Fund was not in operation during this fiscal year.
SUB-ADVISORY AGREEMENT FOR INTERNATIONAL FUND
Marvin & Palmer Associates, Inc., 1201 North Market Street, Suite 2300,
Wilmington, Delaware 19801, is Sub-Adviser for International Fund under an
agreement with the Adviser (the "Sub-Advisory Agreement"). The Sub-Adviser, a
privately-held company, was founded in 1986 by David F. Marvin and Stanley
Palmer. The Sub-Adviser is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts.
Although the Sub-Adviser has not previously acted as adviser or sub-adviser to a
registered investment company, at September 30, 1994, the Sub-Adviser managed a
total of $2.8 billion in investments for 47 institutional investors. Pursuant to
the Sub-Advisory Agreement, the Sub-Adviser is responsible for the investment
and reinvestment of International Fund's assets and the placement of brokerage
transactions in connection therewith. Under the Sub-Advisory Agreement, the
Sub-Adviser is required, among other things, to report to the Adviser or the
Board regularly at such times and in such detail as the Adviser or the Board may
from time to time request in order to permit the Adviser and the Board to
determine the adherence of International Fund to its investment objectives,
policies and restrictions. The Sub-Advisory Agreement also requires the
Sub-Adviser to provide all office space, personnel and facilities necessary and
incident to the Sub-Adviser's performance of its services under the Sub-Advisory
Agreement. The Sub-Adviser also acts as sub-adviser to First Union Emerging
Markets Growth Equity Fund and Conestoga International Equity Fund.
For its services under the Sub-Advisory Agreement, the Sub-Adviser is
paid a monthly fee by the Adviser calculated on an annual basis equal to 0.75%
of the first $100 million of International Fund's average daily net asets, 0.70%
of the second $100 million of International Fund's average daily net assets,
0.65% of the third $100 million of International Fund's average daily net
assets, and 0.60% of International Fund's average daily net assets in excess of
$300 million.
ADMINISTRATION AGREEMENT
SEI Financial Management Corporation (the "Administrator") serves as
administrator for the Funds pursuant to an Administration Agreement between it
and the Funds. The Administrator is a wholly-owned subsidiary of SEI
Corporation, which also owns the Funds' distributor. See "-- Distributor and
Distribution Plans" below. Under the Administration Agreement, the Administrator
provides administrative personnel and services to the Funds for a fee as
described in the Funds' Prospectuses. These services include, among others,
regulatory reporting, fund and portfolio accounting, shareholder reporting
services, and compliance monitering services. Prior to June 10, 1994, Federated
Administrative Services served as administrator for Diversified Growth Fund,
Equity Income Fund and Limited Term Tax Free Income Fund.
The following table sets forth total administrative fees, after
waivers, paid by each of the Funds for the fiscal years ended September 30, 1993
(for all Funds other than Equity Income Fund, Diversified Growth Fund and
Limited Term Income Fund, whose first fiscal year ended November 30, 1993, and
subsequently changed to September 30) and September 30, 1994:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1993 SEPTEMBER 30, 1994
<S> <C> <C>
Stock Fund................................ $178,934 $251,561
Equity Index Fund......................... 191,465 268,851
Balanced Fund............................. 134,377 237,891
Limited Volatility Stock
Fund................................. * *
Asset Allocation Fund..................... 86,911 96,642
Equity Income Fund........................ 20,937 9,212
Diversified Growth Fund................... 22,788 2,204
Emerging Growth Fund...................... * (3,515)
Regional Equity Fund...................... 71,594 154,447
Special Equity Fund....................... 108,640 198,455
Technology Fund........................... * (5,962)
International Fund........................ * 26,814
Limited Term Income
Fund................................. 199,216 175,230
Intermediate Term Income
Fund................................. 91,889 114,428
Fixed Income Fund......................... 75,371 110,363
Intermediate Government
Bond Fund............................ 3,769 11,943
Mortgage Securities Fund.................. 38,753 57,775
Limited Term Tax Free
Income Fund.......................... 1,260 7,438
Intermediate Tax Free
Fund................................. 3,300 9,527
Minnesota Insured Inter-
mediate Tax Free Fund................ * (2,482)
Colorado Intermediate Tax
Free Fund............................ * (11,236)
</TABLE>
* Fund was not in operation during this fiscal year.
DISTRIBUTOR AND DISTRIBUTION PLANS
SEI Financial Services Company (the "Distributor") serves as the
distributor for the Class A, Class B and Class C Shares of each Fund. The
Administrator is a wholly-owned subsidiary of SEI Corporation, which also owns
the Funds' Administrator. See "-- Administration Agreement" above.
The Distributor serves as distributor for the Class A and Class C
Shares pursuant to a Distribution Agreement dated February 10, 1994 (the "Class
A/Class C Distribution Agreement") between itself and the Funds, and as
distributor for the Class B Shares pursuant to a Distribution and Service
Agreement dated August 1, 1994, as amended September 14, 1994 (the "Class B
Distribution and Service Agreement") between itself and the Funds. These
agreements are referred to collectively as the "Distribution Agreements."
Under the Distribution Agreements, the Distributor has agreed to
perform all distribution services and functions of the Funds to the extent such
services and functions are not provided to the Funds pursuant to another
agreement. The Distribution Agreements provide that shares of the Funds are
distributed through the Distributor and, with respect to Class A and Class B
Shares, through securities firms, financial institutions (including, without
limitation, banks) and other industry professionals (the "Participating
Institutions") which enter into sales agreements with the Distributor to perform
share distribution or shareholder support services.
The Distributor receives no compensation for distribution of the Class
C Shares. With respect to the Class A Shares, the Distributor receives all of
the front-end sales charges paid upon purchase of the Funds' shares except for a
portion (as disclosed in the Prospectuses) which may be re-allowed to
Participating Institutions. The Distributor also receives any contingent
deferred sales charges paid with respect so sales of Class A Shares with respect
to which front-end sales charges were waived, as described in the Prospectuses.
The Class A Shares of each Fund also pay a distribution fee to the Distributor
monthly at the annual rate of 0.25% of each Fund's Class A average daily net
assets, which fee may be used by the Distributor to provide compensation for
sales support and distribution activities with respect to the Class A Shares.
The Class B Shares of each Fund pay to the Distributor a sales support
fee at an annual rate of 0.75% of the average daily net assets of the Class B
Shares of such Fund, which fee may be used by the Distributor to provide
compensation for sales support and distribution activities with respect to the
Class B Shares. This fee is calculated and paid each month based on average
daily net assets of Class B of each Fund for that month. In addition to this
fee, the Distributor is paid a shareholder servicing fee at an annual rate of
0.25% of the average daily net assets of each Fund's Class B Shares pursuant to
a service plan (the "Class B Service Plan"), which fee may be used by the
Distributor to provide compensation for personal, ongoing service and/or
maintenance of shareholder accounts with respect to the Class B Shares of a
Fund. Although Class B Shares are sold without a front-end sales charge, the
Distributor pays a total of 4.25% of the amount invested (including a pre-paid
service fee of 0.25% of the amount invested) to dealers who sell Class B Shares
(excluding exchanges from other Class B Shares in the First American family).
The servicing fee payable under the Class B Service Plan is prepaid as described
above.
The Distribution Agreements provide that they will continue in effect
for a period of more than one year from the date of their execution only so long
as such continuance is specifically approved at least annually by the vote of a
majority of the Board members of FAIF and by the vote of the majority of those
Board members of FAIF who are not interested persons of FAIF and who have no
direct or indirect financial interest in the operation of FAIF's Rule 12b-1
Plans of Distribution or in any agreement related to such Plans.
FAIF has adopted Plans of Distribution with respect to the Class A and
Class B Shares of the Funds, respectively, pursuant to Rule 12b-1 under the 1940
Act (collectively, the "Plans"). Rule 12b-1 provides in substance that a mutual
fund may not engage directly or indirectly in financing any activity which is
primarily intended to result in the sale of shares, except pursuant to a plan
adopted under the Rule. The Plans authorize the Distributor to retain the sales
charges paid upon purchase of Class A and Class B Shares. Each of the Plans is a
"compensation-type" plan under which the Distributor is entitled to receive the
distribution fee regardless of whether its actual distribution expenses are more
or less than the amount of the fee. The Class B Plan authorizes the Distributor
to retain the contingent deferred sales charge applied on redemptions of Class B
Shares, except that portion which is reallowed to Participating Institutions.
The Plans recognize that the Distributor, any Participating Institution, the
Administrator, and the Adviser, in their discretion, may from time to time use
their own assets to pay for certain additional costs of distributing Class A and
Class B Shares. Any such arrangements to pay such additional costs may be
commenced or discontinued by the Distributor, any Participating Institution, the
Administrator, or the Adviser at any time.
The following table sets forth (1) the total distribution fees, after
waivers, paid by each of the Funds for the fiscal years ended September 30,
1992, September 30, 1993 (for all Funds other than Equity Income Fund,
Diversified Growth Fund and Limited Term Income Fund, whose first fiscal year
ended November 30, 1993, and subsequently changed to September 30) and September
30, 1994, with respect to the Class A Shares of the Funds, and (2) the total
distribution fees, after waivers, paid by each of the Funds for the fiscal year
ended September 30, 1994, with respect to the Class B Shares of the Funds. As
noted above, no distribution fees are paid with respect to Class C Shares of the
Funds.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, 1992 SEPT. 30, 1993 SEPT. 30, 1994
CLASS A SHARES CLASS A SHARES CLASS A SHARES CLASS B SHARES
<S> <C> <C> <C> <C>
Stock Fund............................ $5,746 $0 $4,910 $204
Equity Index Fund..................... * 0 466 13
Balanced Fund......................... * 0 8,099 140
Limited Volatility Stock
Fund............................. * * * *
Asset Allocation Fund................. * 0 470 9
Equity Income Fund.................... * 0 0 1
Diversified Growth Fund............... * 0 0 11
Emerging Growth Fund.................. * * 0 16
Regional Equity Fund.................. * 0 5,763 81
Special Equity Fund................... 6,667 0 4,077 177
Technology Fund....................... * * 0 2
International Fund.................... * * 0 16
Limited Term Income
Fund............................. * 0 0 1
Intermediate Term Income
Fund............................. * 0 0 *
Fixed Income Fund..................... 11,856 0 0 59
Intermediate Government
Bond Fund........................ 1,820 0 0 *
Mortgage Securities Fund.............. * 0 0 *
Limited Term Tax Free
Income Fund...................... * 0 0 *
Intermediate Tax Free
Fund............................. 1,210 0 0 *
Minnesota Insured Inter-
mediate Tax Free Fund............ * * 0 *
Colorado Intermediate Tax
Free Fund........................ * * 0 *
</TABLE>
* Fund was not in operation during this fiscal year.
The amounts for the fiscal year ended September 30, 1992 were paid to
banks and savings and loan associations. For the fiscal year ended September 30,
1992, the prior distributor for the Funds received $17,119 in sales charges. For
the fiscal years ended September 30, 1993, and September 30, 1994, the
Distributor received $135,334 and $701,251, respectively, in sales charges.
CUSTODIAN; TRANSFER AGENT; COUNSEL; ACCOUNTANTS
The custodian of the Funds' assets is First Trust National Association
(the "Custodian"), First Trust Center, 180 East Fifth Street, St. Paul,
Minnesota 55101. The Custodian is a subsidiary of First Bank System, Inc., which
also owns the Adviser.
The Custodian takes no part in determining the investment policies of
the Funds or in deciding which securities are purchased or sold by the Funds.
All of the instruments representing the investments of the Funds and all cash is
held by the Custodian or, as described in the Prospectuses for International
Fund, by a sub-custodian with respect to such Fund. The Custodian or such
sub-custodian delivers securities against payment upon sale and pays for
securities against delivery upon purchase. The Custodian also remits Fund assets
in payment of Fund expenses, pursuant to instructions of FAIF's officers or
resolutions of the Board of Directors.
As compensation for its services to Stock Fund, Equity Index Fund,
Balanced Fund, Asset Allocation Fund, Regional Equity Fund, Special Equity Fund,
Limited Term Income Fund, Intermediate Term Income Fund, Fixed Income Fund,
Intermediate Government Bond Fund and Mortgage Securities Fund, the Custodian is
paid the following fees: (a) an annual administration fee of $750 per Fund; (b)
an issue held fee, computed as of the end of each month, at the annual rate of
$30 per securities issue held by each Fund; (c) transaction fees, consisting of
(i) a securities buy/sell/maturity fee of $15 per each such transaction, and
(ii) a payment received fee of $12 for each principal pay down payment received
on collateralized mortgage pass-through instruments; (d) a wire transfer fee of
$10 per transaction; (e) a cash management fee, for "sweeping" cash into
overnight investments, at an annual rate of 0.25% of the amounts so invested;
and (f) a remittance fee, for payment of each Fund's expenses, of $3.50 per each
check drawn for such remittances. With respect to the remaining Funds, the
Custodian is paid a monthly fee calculated on an annual basis equal to 0.03%
(0.25% in the case of International Fund) of such Fund's average daily net
assets. Sub-custodian fees with respect to International Fund are paid by the
Custodian out of its fees from such Fund. In addition, the Custodian is
reimbursed for its out-of-pocket expenses incurred while providing its services
to the Funds. The Custodian continues to serve so long as its appointment is
approved at least annually by the Board of Directors including a majority of the
directors who are not interested persons (as defined under the 1940 Act) of
FAIF.
Supervised Service Company, Inc., 811 Main Street, Kansas City,
Missouri 64105, is transfer agent and dividend disbursing agent for the shares
of the Funds.
Dorsey & Whitney P.L.L.P., 220 South Sixth Street, Minneapolis,
Minnesota 55402, is independent General Counsel for the Funds.
KPMG Peat Marwick LLP, 90 South Seventh Street, Minneapolis, Minnesota
55402, acts as the Funds' independent auditors, providing audit services
including audits of the annual financial statements and assistance and
consultation in connection with SEC filings.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Decisions with respect to placement of the Funds' portfolio
transactions are made by the Adviser or, in the case of International Fund, the
Sub-Adviser. The Funds' policy is to seek to place portfolio transactions with
brokers or dealers who will execute transactions as efficiently as possible and
at the most favorable price. The Adviser or Sub-Adviser may, however, select a
broker or dealer to effect a particular transaction without communicating with
all brokers or dealers who might be able to effect such transaction because of
the volatility of the market and the desire of the Adviser or Sub-Adviser to
accept a particular price for a security because the price offered by the broker
or dealer meets guidelines for profit, yield or both. Many of the portfolio
transactions involve payment of a brokerage commission by the appropriate Fund.
In some cases, transactions are with dealers or issuers who act as principal for
their own accounts and not as brokers. Transactions effected on a principal
basis are made without the payment of brokerage commissions but at net prices,
which usually include a spread or markup. In effecting transactions in
over-the-counter securities, the Funds deal with market makers unless it appears
that better price and execution are available elsewhere.
While the Adviser does not deem it practicable and in the Funds' best
interest to solicit competitive bids for commission rates on each transaction,
consideration will regularly be given by the Adviser to posted commission rates
as well as to other information concerning the level of commissions charged on
comparable transactions by other qualified brokers. The following table sets
forth the aggregate brokerage commissions paid by each of the Funds during the
fiscal years ended September 30, 1992, September 30, 1993 (for all Funds other
than Equity Income Fund, Diversified Growth Fund and Limited Term Income Fund,
whose first fiscal year ended November 30, 1993, and subsequently changed to
September 30) and September 30, 1994:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, 1992 SEPT. 30, 1993 SEPT, 30, 1994
<S> <C> <C> <C>
Stock Fund............................ $4,729 $161,188 $261,742
Equity Index Fund..................... * 55,884 69,675
Balanced Fund......................... * 71,478 118,715
Limited Volatility Stock
Fund............................. * * *
Asset Allocation Fund................. * 26,046 27,388
Equity Income Fund.................... * 34,709
Diversified Growth Fund............... * 67,325
Emerging Growth Fund.................. * * 3,563
Regional Equity Fund.................. * 18,744 69,403
Special Equity Fund................... 5,989 267,314 438,181
Technology Fund....................... * * 5,791
International Fund.................... * * 190,085
Limited Term Income
Fund............................. * 0 0
Intermediate Term Income
Fund............................. * 0 0
Fixed Income Fund..................... 0 0 0
Intermediate Government
Bond Fund........................ 0 0 0
Mortgage Securities Fund.............. * 0 0
Limited Term Tax Free
Income Fund...................... * 0
Intermediate Tax Free
Fund............................. 0 100 0
Minnesota Insured Inter-
mediate Tax Free Fund............ * * 0
Colorado Intermediate Tax
Free Fund........................ * * 0
</TABLE>
* Fund was not in operation during this fiscal year.
It is expected that International Fund will purchase most foreign
equity securities in the over-the-counter markets or stock exchanges located in
the countries in which the respective principal offices of the issuers of the
various securities are located if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less governmental supervision and regulation of foreign stock
exchanges than in the United States. Foreign securities settlements may in some
instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held in the form of American
Depotitary Receipts, or ADRs, European Depositary Receipts, or EDRs, or
securities convertible into foreign equity securities. ADRs and EDRs may be
listed on stock exchanges or traded in the over-the-counter markets in the
United States or overseas. The foreign and domestic debt securities and money
market instruments in which the Funds may invest are generaly traded in the
over-the-counter markets.
Subject to the policy of seeking favorable price and execution for the
transaction size and risk involved, in selecting brokers and dealers other than
the Distributor and determining commissions paid to them, the Adviser and, in
the case of International Fund, the Sub-Adviser may consider ability to provide
supplemental performance, statistical and other research information as well as
computer hardware and software for research purpose for consideration, analysis
and evaluation by the staff of the Adviser or Sub-Adviser. In accordance with
this policy, the Funds do not execute brokerage transactions solely on the basis
of the lowest commission rateavailable for a particular transaction. Subject to
the requirements of favorable price and efficient execution, placement of orders
by securities firms for the purchase of shares of the Funds may be taken into
account as a factor in the allocation of portfolio transactions.
Research services that may be received by the Adviser or Sub-Adviser
would include advice, both directly and in writing, as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities or purchasers or sellers of securities, as
well as analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts. The research services may allow the Adviser or Sub-Adviser to
supplement its own investment research activities and enable the Adviser or
Sub-Adviser to obtain the views and information of individuals and research
staffs of many different securities firms prior to making investment decisions
for the Funds. To the extent portfolio transactions are effected with brokers
and dealers who furnish research services, the Adviser or Sub-Adviser would
receive a benefit, which is not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Funds from these transactions.
Research services furnished by brokers and dealers used by the Funds for
portfolio transactions may be utilized by the Adviser or Sub-Adviser in
connection with investment services for other accounts and, likewise, research
services provided by brokers and dealers used for transactions of other accounts
may be utilized by the Adviser or Sub-Adviser in performing services for the
Funds. The Adviser and Sub-Adviser determine the reasonableness of the
commissions paid in relation to their view of the value of the brokerage and
research services provided, considered in terms of the particular transactions
and their overall responsibilities with respect to all accounts as to which they
exercise investment discretion.
The Adviser and Sub-Adviser have not entered into any formal or
informal agreements with any broker or dealer, and do not maintain any "formula"
that must be followed in connection with the placement of Fund portfolio
transactions in exchange for research services provided to the Adviser or
Sub-Adviser, except as noted below. The Adviser and Sub-Adviser may, from time
to time, maintain an informal list of brokers and dealers that will be used as a
general guide in the placement of Fund business in order to encourage certain
brokers and dealers to provide the Adviser and Sub-Adviser with research
services, which the Adviser or Sub-Adviser anticipates will be useful to it. Any
list, if maintained, would be merely a general guide, which would be used only
after the primary criteria for the selection of brokers and dealers (discussed
above) had been met, and, accordingly, substantial deviations from the list
could occur. The Adviser or Sub-Adviser would authorize the Funds to pay an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged only if the
Adviser or Sub-Adviser determined in good faith that the amount of such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser or
Sub-Adviser with respect to the Funds.
The Funds do not effect any brokerage transactions in their portfolio
securities with any broker or dealer affiliated directly or indirectly with the
Adviser or the Distributor unless such transactions, including the frequency
thereof, the receipt of commissions payable in connection therewith, and the
selection of the affiliated broker or dealer effecting such transactions are not
unfair or unreasonable to the shareholders of the Funds, as determined by the
Board of Directors. Any transactions with an affiliated broker or dealer must be
on terms that are both at least as favorable to the Funds as the Funds can
obtain elsewhere and at least as favorable as such affiliated broker or dealer
normally gives to others.
When two or more clients of the Adviser or Sub-Adviser are
simultaneously engaged in the purchase or sale of the same security, the prices
and amounts are allocated in accordance with a formula considered by the Adviser
or Sub-Adviser to be equitable to each client. In some cases, this system could
have a detrimental effect on the price or volume of the security as far as each
client is concerned. In other cases, however, the ability of the clients to
participate in volume transactions may produce better executions for each
client.
CAPITAL STOCK
As of October 31, 1994, the directors and officers of FAIF as a group
owned less than one percent of each class of each Fund's outstanding shares.
Limited Volatility Stock Fund was not in operation as of October 31, 1994. As of
that date, the Funds were aware that the following persons owned of record five
percent or more of the outstanding shares of each class of stock of the Funds.
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING SHARES
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
STOCK FUND
Var & Co.............................................. 0% 0% 73.01%
P.O. Box 64482
St. Paul, MN 55164
Diamond Retirement Plan............................... 0% 0% 22.07%
180 East Fifth Street
St. Paul, MN 55101
FBS Investment Services, Inc.......................... 27.13% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 40.25% 99.80% 0%
200 Liberty Street
New York, NY 10281
Mankato State University Foundation Inc............... 5.14% 0% 0%
P.O. Box 8400, MSU 60
Mankato, MN 56002-8400
EQUITY INDEX FUND
Var & Co.............................................. 0% 0% 97.14%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 36.27% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 52.60% 96.49% 0%
200 Liberty Street
New York, NY 10281
BALANCED FUND
Var & Co.............................................. 0% 0% 68.49%
P.O. Box 64482
St. Paul, MN 55164
Diamond Retirement Plan............................... 0% 0% 25.21%
180 East Fifth Street
St. Paul, MN 55101
FBS Investment Services, Inc.......................... 42.65% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 48.23% 99.66% 0%
200 Liberty Street
New York, NY 10281
First Trust National Association...................... 0% 0% 6.05%
180 East Fifth Street
St. Paul, MN 55101
ASSET ALLOCATION FUND
Var & Co.............................................. 0% 0% 97.81%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 25.44% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 69.34% 90.75% 0%
200 Liberty Street
New York, NY 10281
SEI Corporation....................................... 0% 9.25% 0%
680 East Swedesford Road
Wayne, PA 19087
EQUITY INCOME FUND
Var & Co.............................................. 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN 55164
SEI Corporation....................................... 0% 100.00% 0%
680 East Swedesford Road
Wayne, PA 19087
Joseph A. Grear and Linda Grear....................... 11.47% 0% 0%
1122 S. Broadway
Oark Ridge, IL 60068
Robert T. Noonan...................................... 7.79% 0% 0%
2129 N. Fremont Avenue
Chicago, IL 60614
Kenmar B. Jauss and William C. Jauss.................. 6.95% 0% 0%
246 Maple Avenue
Wilmette, IL 60091
DIVERSIFIED GROWTH FUND
Var & Co.............................................. 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN 55164
National Financial Services Corporation............... 0% 93.33% 0%
200 Liberty Street
New York, NY 10281
SEI Corporation ...................................... 0% 6.67% 0%
680 East Swedesford Road
Wayne, PA 19087
EMERGING GROWTH FUND
Var & Co. ............................................ 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc. ........................ 33.83% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation .............. 48.47% 94.15% 0%
200 Liberty Street
New York, NY 10281
First Bank National Association ...................... 16.04% 0% 0%
601 Second Avenue South
Minneapolis, MN 55480
REGIONAL EQUITY FUND
Var & Co. ............................................. 0% 0% 85.58%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc. ........................ 38.14% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation .............. 46.79% 100.00% 0%
200 Liberty Street
New York, NY 10281
SPECIAL EQUITY FUND
Var & Co. ............................................ 0% 0% 89.96%
P.O. Box 64482
St. Paul, MN 55164
Diamond Retirement Plan .............................. 0% 0% 10.04%
180 East Fifth Street
St. Paul, MN 55101
FBS Investment Services, Inc. ........................ 21.57% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation .............. 33.34% 99.48% 0%
200 Liberty Street
New York, NY 10281
TECHNOLOGY FUND
Var & Co. ............................................ 0% 0% 99.86%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc. ........................ 25.25% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
First Trust National Association ..................... 15.83% 0% 0%
180 East Fifth Street
St. Paul, MN 55101
National Financial Services Corporation .............. 47.77% 36.36% 0%
200 Liberty Street
New York, NY 10281
SEI Corporation ...................................... 0% 63.64% 0%
680 East Swedesford Road
Wayne, PA 19087
Steve Johnson ........................................ 5.00% 0% 0%
4210 Goldenrod Drive
Colorado Springs, CO 80918
INTERNATIONAL FUND
Var & Co. ............................................ 0% 0% 98.65%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc. ........................ 8.31% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation .............. 40.71% 97.72% 0%
200 Liberty Street
New York, NY 10281
First Asset Management ............................... 8.38% 0% 0%
601 Second Avenue South
Minneapolis, MN 55480
Mankato State University Foundation Inc. ............. 38.88% 0% 0%
P.O. Box 8400, MSU 60
Mankato, MN 56002-8400
LIMITED TERM INCOME FUND
Var & Co. ............................................ 0% 0% 79.14%
P.O. Box 64482
St. Paul, MN 55164
Diamond Retirement Plan .............................. 0% 0% 20.86%
180 East Fifth Street
St. Paul, MN 55101
FBS Investment Services, Inc. ........................ 51.43% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
SEI Corporation ...................................... 0% 100% 0%
680 East Swedesford Road
Wayne, PA 19087
Family Housing Fund................................... 30.34% 0% 0%
1515 Midwest Plaza, 801 Nicollet Mall
Minneapolis, MN 55402
Planned Parenthood of Minnesota....................... 7.54% 0% 0%
1965 Ford Parkway
St. Paul, MN 55116
INTERMEDIATE TERM INCOME FUND
Var & Co.............................................. 0% 0% 91.45%
P.O. Box 64482
St. Paul, MN 55164
Diamond Retirement Plan............................... 0% 0% 8.55%
180 East Fifth Street
St. Paul, MN 55101
FBS Investment Services, Inc.......................... 59.28% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 40.16% 0% 0%
200 Liberty Street
New York, NY 10281
FIXED INCOME FUND
Var & Co.............................................. 0% 0% 81.05%
P.O. Box 64482
St. Paul, MN 55164
Diamond Retirement Plan............................... 0% 0% 16.27%
180 East Fifth Street
St. Paul, MN 55101
FBS Investment Services, Inc.......................... 44.31% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 26.67% 97.84% 0%
200 Liberty Street
New York, NY 10281
INTERMEDIATE GOVERNMENT BOND FUND
Var & Co.............................................. 0% 0% 96.38%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 55.36% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 30.99% 97.84% 0%
200 Liberty Street
New York, NY 10281
MORTGAGE SECURITIES FUND
Var & Co.............................................. 0% 0% 96.89%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 71.75% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 28.23% 0% 0%
200 Liberty Street
New York, NY 10281
LIMITED TERM TAX FREE INCOME FUND
Var & Co.............................................. 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN
Western Folder Dist................................... 51.23% 0% 0%
1549 W. Glenlake Avenue
Itaska, IL 60143
Ann M. DePaul, George A. Tenyer, Nancy L. ............ 11.05% 0% 0%
Adcock and Martha Andre
4612 Stafford
McHenry, IL 60050
Terrence L. Dooley and Marguerite K. Dooley........... 9.64% 0% 0%
1964 N. Burling Street
Chicago, Illinois 60614
Goerge A. Davidson and Patricia M Davidson............ 6.88% 0% 0%
219 Anderson Terrace
Des Plaines, IL 60016
INTERMEDIATE TAX FREE FUND
Var & Co.............................................. 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 22.52% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 13.71% 0% 0%
200 Liberty Street
New York, NY 10281
Reynolds W. Guyer..................................... 32.45% 0% 0%
1620 West 7th Street
St. Paul, MN 55102
Ray L. Miller and Ruty Miller......................... 11.24% 0% 0%
7121 Road 311
New Castle, CO 81647
Dorothy M. Baker...................................... 10.17% 0% 0%
1721 E. 6th
Pueblo, CO 81001
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
Var & Co.............................................. 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 60.37% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 26.74% 0% 0%
200 Liberty Street
New York, NY 10281
First Asset Management................................ 6.34% 0% 0%
601 Second Avenue South
Minneapolis, MN 55480
O. Ward Johnson Jr. and Charlotte S. Johnson.......... 6.55% 0% 0%
36 Kenwood Parkway
St. Paul, MN 55105
COLORADO INTERMEDIATE TAX FREE FUND
Var & Co.............................................. 0% 0% 100.00%
P.O. Box 64482
St. Paul, MN 55164
FBS Investment Services, Inc.......................... 7.70% 0% 0%
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
National Financial Services Corporation............... 17.47% 0% 0%
200 Liberty Street
New York, NY 10281
Mary Boyd............................................. 14.13% 0% 0%
P.O. Box 5748
Snowmass Village, CO 81615
Barbara Atwood Reid POD David J. Hyman................ 13.35% 0% 0%
Box 1854
Aspen, CO 81612
Kathryn M. Long....................................... 8.20% 0% 0%
P.O. Box KK
Basalt, CO 81621
William C. Nelson FBO R.K. Nelson Estate.............. 7.04% 0% 0%
711 Klondike Dr.
Buffalo, WY 82834
John A. Tesadri Sr., Marily Oliver and John........... 7.02% 0% 0%
A. Tesadri Jr.
1109 Blake
Glenwood Springs, CO 81601
</TABLE>
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The method for determining the public offering price of the shares of a
Fund is summarized in the Retail Class Prospectuses under the captions
"Investing in the Funds" and "Determining the Price of Shares" and in the
Institutional Class Prospectuses under the caption "Purchases and Redemptions of
Shares." The net asset value of each Fund's shares is determined on each day
during which the New York Stock Exchange (the "NYSE") is open for business. The
NYSE is not open for business on the following holidays (or on the nearest
Monday or Friday if the holiday falls on a weekend): New Year's Day,
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Each year the
NYSE may designate different dates for the observance of these holidays as well
as designate other holidays for closing in the future. To the extent that the
securities of a Fund are traded on days that the Fund is not open for business,
such Fund's net asset value per share may be affected on days when investors may
not purchase or redeem shares. This may occur, for example, where a Fund holds
securities which are traded in foreign markets.
On September 30, 1994, the net asset values per share for each class of
shares of the Funds were calculted as follows:
<TABLE>
<CAPTION>
NET ASSET
NET ASSETS SHARES VALUE PER SHARE
(IN DOLLARS) / OUTSTANDING = (IN DOLLARS)
<S> <C> <C> <C>
STOCK FUND
Class A ............................... 8,421,393 / 510,062 = 16.51
Class B ............................... 345,703 / 20,964 = 16.49
Class C ............................... 154,948,608 / 9,388,570 = 16.50
EQUITY INDEX FUND
Class A ............................... 758,272 / 70,968 = 10.68
Class B ............................... 28,646 / 2,686 = 10.66
Class C ............................... 163,687,634 / 15,335,999 = 10.67
BALANCED FUND
Class A ............................... 13,733,555 / 1,303,415 = 10.54
Class B ............................... 270,442 / 25,684 = 10.53
Class C ............................... 125,284,569 / 11,891,257 = 10.54
LIMITED VOLATILITY STOCK FUND
Class A ............................... *
Class B ............................... *
Class C ............................... *
ASSET ALLOCATION FUND
Class A ............................... 707,339 / 68,088 = 10.39
Class B ............................... 10,838 / 1,045 = 10.37
Class C ............................... 47,226,605 / 4,548,222 = 10.38
EQUITY INCOME FUND
Class A ............................... 1,852,437 / 187,297 = 9.89
Class B ............................... 1,005 / 1,370 = 9.88
Class C ............................... 17,488,824 / 3,502,094 = 9.89
DIVERSIFIED GROWTH FUND
Class A ............................... 1,899,445 / 208,967 = 9.09
Class B ............................... 12,451 / 1,370 = 9.09
Class C ............................... 31,875,452 / 3,502,094 = 9.10
EMERGING GROWTH FUND
Class A ............................... 90,414 / 8,552 = 10.57
Class B ............................... 18,245 / 1,730 = 10.55
Class C ............................... 6,849,293 / 648,578 = 10.56
REGIONAL EQUITY FUND
Class A ............................... 8,344,602 / 666,336 = 12.52
Class B ............................... 184,812 / 14,788 = 12.50
Class C ............................... 96,045,402 / 7,668,481 = 12.52
SPECIAL EQUITY FUND
Class A ............................... 7,332,763 / 423,818 = 17.30
Class B ............................... 369,846 / 21,387 = 17.29
Class C ............................... 128,806,704 / 7,445,378 = 17.30
TECHNOLOGY FUND
Class A ............................... 61,703 / 5,513 = 11.19
Class B ............................... 1,782 / 160 = 11.17
Class C ............................... 6,490,914 / 580,310 = 11.19
INTERNATIONAL FUND
Class A ............................... 463,539 / 45,395 = 10.21
Class B ............................... 21,724 / 2,128 = 10.21
Class C ............................... 47,660,566 / 4,665,166 = 10.22
LIMITED TERM INCOME FUND
Class A ............................... 9,508,957 / 965,349 = 9.85
Class B ............................... 1,005 / 102 = 9.84
Class C ............................... 70,265,867 / 7,133,617 = 9.85
INTERMEDIATE TERM INCOME FUND
Class A ............................... 3,208,201 / 335,760 = 9.55
Class B ............................... *
Class C ............................... 68,444,475 / 7,163,523 = 9.55
FIXED INCOME FUND
Class A ............................... 8,028,526 / 774,206 = 10.37
Class B ............................... 115,274 / 11,135 = 10.35
Class C ............................... 90,186,580 / 8,700,311 = 10.37
INTERMEDIATE GOVERNMENT BOND FUND
Class A ............................... 1,977,557 / 220,225 = 8.98
Class B ............................... *
Class C ............................... 27,775,824 / 3,093,853 = 8.98
MORTGAGE SECURITIES FUND
Class A ............................... 256,152 / 26,373 = 9.71
Class B ............................... *
Class C ............................... 28,417,713 / 2,926,027 = 9.71
LIMITED TERM TAX FREE INCOME FUND
Class A ............................... 599,346 / 60,241 = 9.95
Class B ............................... *
Class C ............................... 16,348,474 / 1,643,218 = 9.95
INTERMEDIATE TAX FREE FUND
Class A ............................... 1,127,629 / 109,654 = 10.28
Class B ............................... *
Class C ............................... 6,168,460 / 599,982 = 10.28
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
Class A ............................... 1,507,600 / 157,379 = 9.58
Class B ............................... *
Class C ............................... 20,272,513 / 2,114,099 = 9.59
COLORADO INTERMEDIATE TAX FREE FUND
Class A ............................... 692,619 / 68,223 = 10.15
Class B ............................... *
Class C ............................... 7,281,492 / 716,975 = 10.16
</TABLE>
* Not in operation at September 30, 1994.
FUND PERFORMANCE
SEC STANDARDIZED PERFORMANCE FIGURES
YIELD FOR THE FUNDS. Yield for the Funds is a measure of the net
investment income per share (as defined) earned over a 30-day period expressed
as a percentage of the maximum offering price of a Fund's shares at the end of
the period. Based upon the 30-day period ended September 30, 1994, the yields
for the Class A, Class B and Class C Shares of the Funds were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Stock Fund................................................ 2.06% 1.27% 2.20%
Equity Index Fund......................................... 2.38% 1.60% 2.60%
Balanced Fund............................................. 3.63% 2.90% 3.90%
Limited Volatility Stock Fund............................. * * *
Asset Allocation Fund..................................... 3.14% 2.40% 3.39%
Equity Income Fund........................................ 3.90% 3.09% 4.08%
Diversified Growth Fund................................... 1.74% 0.83% 1.82%
Emerging Growth Fund...................................... 0.33% -- 0.35%
Regional Equity Fund...................................... 0.61% -- 0.73%
Special Equity Fund....................................... 1.94% 1.14% 2.13%
Technology Fund........................................... -- -- --
International Fund........................................ -- -- --
Limited Term Income Fund.................................. 4.61% 3.71% 4.70%
Intermediate Term Income Fund............................. 5.77% * 5.99%
Fixed Income Fund......................................... 5.89% 5.13% 6.12%
Intermediate Government Bond Fund......................... 5.93% * 6.12%
Mortgage Securities Fund.................................. 6.07% * 6.31%
Limited Term Tax Free Income Fund......................... 3.57% * 3.64%
Intermediate Tax Free Fund................................ 4.37% * 4.50%
Minnesota Insured Intermediate Tax Free Fund.............. 4.62% * 4.76%
Colorado Intermediate Tax Free Fund....................... 4.39% * 4.52%
</TABLE>
* Not in operation at September 30, 1994.
Such yield figures were determined by dividing the net investment income per
share earned during the specified 30-day period by the maximum offering price
per share on the last day of the period, according to the following formula:
6
Yield = 2 [((a - b) / cd) + 1) - 1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = average daily number of shares outstanding during the period that
were entitled to receive dividends
d = maximum offering price per share on the last day of the period
TAX EQUIVALENT YIELD FOR TAX FREE FUNDS. Tax equivalent yield is the
yield that a taxable investment must generate in order to equal a Fund's yield
for an investor in a stated federal or combined federal/state income tax
bracket. The tax equivalent yield for each tax free Fund named below is computed
by dividing that portion of such Fund's yield (computed as described above) that
is tax exempt by one minus the stated federal or combined federal/state income
tax rate, and adding the resulting number to that portion, if any, of such
Fund's yield that is not tax exempt. Based upon the maximum federal income tax
rate of 39.6% and the combined maximum federal/state tax rates of 44.7% for
Minnesota and 42.6% for Colorado, the tax equivalent yields for the tax free
Funds named below for the 30-day period ended September 30, 1994, computed as
described above, were as follows:
CLASS A CLASS B CLASS C
Limited Term Tax Free Income Fund .......... 5.91% * 6.03%
Intermediate Tax Free Fund ................. 7.24% * 7.45%
Minnesota Insured Intermediate Tax Free Fund 8.35% * 8.61%
Colorado Intermediate Tax Free Fund ........ 7.65% * 7.87%
* Not in operation at September 30, 1994.
TOTAL RETURN. Total return measures both the net investment income
generated by, and the effect of any realized or unrealized appreciation or
depreciation of, the underlying investments in a Fund's portfolio. The Fund"
average annual and cumulative total return figures are computed in accordance
with the standardized methods prescribed by the Securities and Exchange
Commission.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return figures are
computed by determining the average annual compounded rates of return over the
periods indicated in the advertisement, sales literature or shareholders'
report, that would equate the initial amount invested to the ending redeemable
value, according to the following formula:
n
P(1 + T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period
This calculation (i) assumes all dividends and distributions are reinvested at
net asset value on the appropriate reinvestment dates as described in the
Prospectuses, and (ii) deducts (a) the maximum sales charge from the
hypothetical initial $1,000 investment (if applicable), and (b) all recurring
fees, such as advisory fees, charged as expenses to all shareholder accounts.
CUMULATIVE TOTAL RETURN. Cumulative total return is computed by finding
the cumulative compounded rate of return over the period indicated in the
advertisement that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
CTR = ((ERV - P) / P ) 10
Where: CTR = cumulative total return
ERV = ending redeemable value at the end of, the period of a
hypothetical $1,000 payment made at the beginning of
such period; and
P = initial payment of $1,000
This calculation (i) assumes all dividends and distributions are reinvested at
net asset value on the appropriate reinvestment dates as described in the
Prospectuses, and (ii) deducts (a) the maximum sales charge from the
hypothetical initial $1,000 investment (if applicable), and (b) all recurring
fees, such as advisory fees, charged as expenses to all shareholder accounts.
Based on the foregoing, the average annual and aggregate total returns
for each class of the Funds from inception through September 30, 1994 were as
follows. The performance for Class A and Class B Shares will normally be lower
than for Class C Shares because Class A and Class B Shares are subject to sales
and distribution charges not charged to Class C Shares.
<TABLE>
<CAPTION>
Average Annual
Cumulative ----------------------------------------------------------
Since Inception* Since Inception* One Year Five Year
------------------ ----------------- ----------------- ------------------
Without With Without With Without With Without With
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK FUND
Class A................... 107.56% 98.24% 11.35% 10.60% 8.35% 3.50% 9.50% 8.50%
Class B................... (0.43)% (3.38)% ** **
Class C................... 1.70% 2.60% ** **
EQUITY INDEX FUND
Class A................... 11.53% 6.52% 6.26% 3.58% 3.25% (1.40)% ** **
Class B................... 0.48% 3.84% ** **
Class C................... 0.18% 0.28% ** **
BALANCED FUND
Class A................... 13.73% 8.62% 7.43% 4.71% 3.02% (1.65)% ** **
Class B................... (0.55)% (4.38)% ** **
Class C................... (0.64)% (0.98)% ** **
LIMITED VOLATILITY STOCK FUND
Class A................... ** ** ** ** ** ** ** **
Class B................... ** ** ** **
Class C................... ** ** ** **
ASSET ALLOCATION FUND
Class A................... 9.96% 5.02% 5.43% 2.77% 1.81% (2.78)% ** **
Class B................... 0.19% 1.52% ** **
Class C................... (0.90)% (1.37)% ** **
EQUITY INCOME FUND
Class A................... 2.81% (1.78)% 5.45% (3.45)% ** ** ** **
Class B................... 0.57% 4.48% ** **
Class C................... 0.45% 2.77% ** **
DIVERSIFIED GROWTH FUND
Class A................... 0.40% (4.13)% 0.77% (8.00)% ** ** ** **
Class B................... 2.75% 21.80% ** **
Class C................... 2.36% 14.62% ** **
EMERGING GROWTH FUND
Class A................... 5.88% 1.12% 12.02% 2.30% ** ** ** **
Class B................... 6.67% 52.82% ** **
Class C................... 5.68% 11.61% ** **
REGIONAL EQUITY FUND
Class A................... 28.30% 22.54% 14.89% 11.99% 6.76% 1.99% ** **
Class B................... 2.73% 21.57% ** **
Class C................... 1.46% 2.23% ** **
SPECIAL EQUITY FUND
Class A................... 154.16% 142.75% 14.72% 13.95% 18.70% 13.39% 12.67% 11.65%
Class B................... 5.22% 41.29% ** **
Class C................... 7.31% 11.16% ** **
TECHNOLOGY FUND
Class A................... 11.90% 6.88% 24.34% 14.07% ** ** ** **
Class B................... 13.40% 106.07% ** **
Class C................... 11.90% 24.34% ** **
INTERNATIONAL FUND
Class A................... 2.30% (2.30)% 4.80% (4.78)% ** ** ** **
Class B................... (0.20)% (1.55)% ** **
Class C................... 2.20% 4.50% ** **
LIMITED TERM INCOME FUND
Class A................... 5.90% 3.83% 3.24% 2.11% 2.21% 0.12% ** **
Class B................... 0.51% 4.01% ** **
Class C................... 1.24% 1.89% ** **
INTERMEDIATE TERM INCOME FUND
Class A................... 6.09% 2.11% 3.35% 1.17% (1.05)% (4.77)% ** **
Class B................... ** ** ** **
Class C................... (1.48)% (2.27)% ** **
FIXED INCOME FUND
Class A................... 68.83% 62.50% 8.02% 7.41% (2.92)% (6.53)% 7.65% 6.83%
Class B................... (0.88)% (6.97)% ** **
Class C................... (3.23)% (4.94)% ** ** **
INTERMEDIATE GOVERNMENT BOND FUND
Class A................... 52.43% 47.84% 6.40% 5.92% (1.13)% (4.05)% 6.13% 5.48%
Class B................... ** ** ** **
Class C................... (1.77)% (2.70)% ** **
MORTGAGE SECURITIES FUND
Class A................... 6.91% 2.89% 3.79% 1.60% (0.79)% (4.49)% ** **
Class B................... ** ** ** **
Class C................... (2.15)% (3.28)% ** **
LIMITED TERM TAX FREE INCOME FUND
Class A................... 1.11% (0.88)% 2.14% (1.70)% ** ** ** **
Class B................... ** ** ** **
Class C................... 0.27% 1.68% ** **
INTERMEDIATE TAX FREE FUND
Class A................... 42.26% 41.86% 5.76% 5.28% (1.25)% (4.23)% 5.74% 5.10%
Class B................... ** ** ** **
Class C................... (2.91)% (4.44)% ** **
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
Class A................... (1.68)% (4.63)% (2.83)% (7.83)% ** ** ** **
Class B................... ** ** ** **
Class C................... (1.58)% (2.67)% ** **
COLORADO INTERMEDIATE TAX FREE FUND
Class A................... 3.66% 0.55% 7.49% 1.12% ** ** ** **
Class B................... ** ** ** **
Class C................... 3.76% 7.70% ** **
</TABLE>
* Inception dates are as follows: Stock Fund, Class A, December 22, 1987;
Class B, August 15, 1994; Class C, February 4, 1994; Equity Index Fund,
Class A, December 14, 1992; Class B, August 15, 1994; Class C, February 4,
1994; Balanced Fund, Class A, December 14, 1992; Class B, August 15, 1994;
Class C, February 4, 1994; Limited Volatility Stock Fund, no classes in
operation at September 30, 1994; Asset Allocation Fund, Class A, December
14, 1992; Class B, August 15, 1994; Class C, February 4, 1994; Equity
Income Fund, Class A, December 18, 1992; Class B, August 15, 1994; Class C,
August 2. 1994; Diversified Growth Fund, Class A, December 18, 1992; Class
B, August 15, 1994; Class C, August 2, 1994; Emerging Growth Fund, Class A,
April 4, 1994; Class B, August 15, 1994; Class C, April 4, 1994; Regional
Equity Fund, Class A, December 14, 1992; Class B, August 15, 1994; Class C,
February 4, 1994; Special Equity Fund, Class A, December 22, 1987; Class B,
August 15, 1994; Class C, February 4, 1994; Technology Fund, Class A, April
4, 1994; Class B, August 15, 1994; Class C, April 4, 1994; International
Fund, Class A, April 4, 1994; Class B, August 15, 1994; Class C, April 4,
1994; Limited Term Income Fund, Class A, December 14, 1992; Class B, August
15, 1994; Class C, February 4, 1994; Intermediate Term Income Fund, Class
A, December 14, 1992; Class B, not in operation at September 30, 1994;
Class C, February 4, 1994; Fixed Income Fund, Class A, December 22, 1987;
Class B, August 15, 1994; Class C, February 4, 1994; Intermediate
Government Bond Fund, Class A, December 22, 1987; Class B, not in operation
at September 30, 1994; Class C, February 4, 1994; Mortgage Securities Fund,
Class A, December 14, 1992; Class B, not in operation at September 30,
1994; Class C, February 4, 1994; Limited Term Tax Free Income Fund, Class
A, February 19, 1993; Class B. not in operation at September 30, 1994;
Class C, August 2, 1994; Intermediate Tax Free Fund, Class A, December 22,
1987; Class B, not in operation at September 30, 1994; Class C, February 4,
1994; Minnesota Insured Intermediate Tax Free Fund, Class A, February 28,
1994; Class B, not in operation at September 30, 1994; Class C, February
28, 1994; Colorado Intermediate Tax Free Fund, Class A, April 4, 1994;
Class B, not in operation at September 30, 1994; Class C, April 4, 1994.
** Not in operation for entire period.
NON-STANDARD DISTRIBUTION RATES
HISTORICAL DISTRIBUTION RATES. The Funds' historical annualized
distribution rates are computed by dividing the income dividends of a Fund for a
stated period by the maximum offering price on the last day of such period. For
the one-year period ended September 30, 1994, the historical distribution rates
of the Class A, Class B and Class C Shares of the Funds were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Stock Fund................................................ 1.68% 0.54% 1.89%
Equity Index Fund......................................... 2.21% 0.67% 2.43%
Balanced Fund............................................. 3.08% 0.68% 3.30%
Limited Volatility Stock Fund............................. * * *
Asset Allocation Fund..................................... 2.42% 0.48% 2.63%
Equity Income Fund........................................ 1.78% 0.46% 1.86%
Diversified Growth Fund................................... 0.58% 0.26% 0.60%
Emerging Growth Fund...................................... 0.06% -- 0.06%
Regional Equity Fund...................................... 0.57% 0.18% 0.65%
Special Equity Fund....................................... 1.57% 0.47% 1.69%
Technology Fund........................................... -- -- --
International Fund........................................ -- -- --
Limited Term Income Fund.................................. 4.26% 0.71% 4.35%
Intermediate Term Income Fund............................. 4.63% * 4.82%
Fixed Income Fund......................................... 5.28% 0.94% 5.49%
Intermediate Government Bond Fund......................... 4.21% * 4.34%
Mortgage Securities Fund.................................. 5.53% * 5.75%
Limited Term Tax Free Income Fund......................... 1.40% * 1.43%
Intermediate Tax Free Fund................................ 4.10% * 4.23%
Minnesota Insured Intermediate Tax Free Fund.............. 2.54% * 2.62%
Colorado Intermediate Tax Free Fund....................... 2.07% * 2.13%
</TABLE>
* Not in operation at September 30, 1994.
ANNUALIZED CURRENT DISTRIBUTION RATES. The Funds' annualized current
distribution rates are computed by multiplying a Fund's income dividends for a
specified month (or three-month period, in the case of an equity Fund) by twelve
(or four, in the case of an equity Fund), and dividing the resulting figure by
the maximum offering price on the last day of the specified period. The
annualized current distribution rates for the one or three-month period (as
appropriate) ended September 30, 1994 for Funds were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Stock Fund ............................................... 2.14% 2.04% 2.21%
Equity Index Fund ........................................ 2.59% 1.63% 2.75%
Balanced Fund ............................................ 3.01% 2.86% 3.22%
Limited Volatility Stock Fund ............................ * * *
Asset Allocation Fund .................................... 2.02% 1.55% 2.20%
Equity Income Fund ....................................... 2.92% 2.33% 3.06%
Diversified Growth Fund .................................. 1.26% 1.06% 1.32%
Emerging Growth Fund ..................................... -- -- --
Regional Equity Fund ..................................... 0.71% 0.72% 0.82%
Special Equity Fund ...................................... 1.84% 1.87% 2.00%
Technology Fund .......................................... -- -- --
International Fund ....................................... -- -- --
Limited Term Income Fund ................................. 4.54% 4.09% 4.63%
Intermediate Term Income Fund ............................ 5.20% * 5.40%
Fixed Income Fund ........................................ 5.35% 5.32% 5.55%
Intermediate Government Bond Fund ........................ 4.67% * 4.33%
Mortgage Securities Fund ................................. 5.60% * 5.81%
Limited Term Tax Free Income Fund ........................ 3.19% * 4.08%
Intermediate Tax Free Fund ............................... 4.08% * 4.20%
Minnesota Insured Intermediate Tax Free Fund ............. 4.01% * 4.13%
Colorado Intermediate Tax Free Fund ...................... 4.02% * 4.14%
</TABLE>
* Not in operation at September 30, 1994.
TAX EQUIVALENT DISTRIBUTION RATES. The tax equivalent distribution rate
for the tax free Funds is computed by dividing that portion of such a Fund's
annualized current distribution rate (computed as described above) which is
tax-exempt by one minus the stated federal or combined federal/state income tax
rate, and adding the resulting figure to that portion, if any, of the annualized
current distribution rate which is not tax-exempt. Based upon the maximum
federal or combined federal/state income tax rates set forth above under "-- SEC
Standardized Performance Figures -- Tax Equivalent Yield for Tax Free Funds,"
the annualized current distribution rates for the month ended September 30,
1994, for each class of the tax free Funds were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
Limited Term Tax Free Income Fund......................... 5.28% * 6.75%
Intermediate Tax Free Fund................................ 6.75% * 6.95%
Minnesota Insured Intermediate Tax Free Fund.............. 7.25% * 7.47%
Colorado Intermediate Tax Free Fund....................... 7.00% * 7.21%
</TABLE>
* Not in operation at September 30, 1994.
CERTAIN PERFORMANCE COMPARISONS
Some of the Funds may compare their performance to that of certain
published or otherwise widely disseminated indices compiled by third parties.
These Funds, and the indices to which they may compare their performance, are as
follows, among others:
STOCK FUND, EQUITY INDEX FUND, BALANCED FUND, REGIONAL EQUITY FUND, and
SPECIAL EQUITY FUND may compare their performance to, among others:
* DOW JONES INDUSTRIAL AVERAGE ("DJIA"), which represents share prices
of selected blue chip industrial corporations as well as public
utility and transportation companies. The DJIA indicates daily changes
in the average price of stocks in any of its categories. It also
reports total sales for each group of industries. Because it
represents the top corporations of America, the DJIA's index movements
are leading economic indicators for the stock market as a whole.
* STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS ("S&P
500"), which is a composite index of common stocks in industrial,
transportation, and financial and public utility companies which
compares total returns of funds whose portfolios are invested
primarily in common stocks. In addition, the S&P 500 index assumes
reinvestment of all dividends paid by stocks listed in its index.
Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
* STANDARD & POOR'S INDUSTRIALS, which is calculated on the same basis
as the S&P 500 index, is made up of the 385 industrial stocks within
the S&P 500.
* NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATION
(NASDAQ) COMPOSITE INDEX, which is a computerized system that provides
brokers and dealers with price quotations for all domestic common
stocks traded in the regular market. NASDAQ quotations are published
in the financial pages of most newspapers.
* VALUE LINE COMPOSITE INDEX, which is an equally-weighted geometric
average of approxi-mately 1,700 various stocks. This index is designed
to reflect price changes of typical industrial stocks.
* RUSSELL 2000 INDEX, which is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be
used to compare to the total returns of funds whose portfolios are
invested primarily in small capitalization common stocks.
* WILSHIRE 5000 EQUITY INDEX, which consists of nearly 5,000 common
equity securities, covering all stocks in the U.S. for which daily
pricing is available, and can be used to compare to the total returns
of funds whose portfolios are invested primarily in common stocks.
* NYSE COMPOSITE INDEX, which is a market value-weighted index which
relates all NYSE stocks to an aggregate market value as of December
31, 1965, and which is adjusted for capitalization changes.
LIMITED VOLATILITY STOCK FUND may compare its performance to the DJIA
and the S&P 500, described above. EMERGING GROWTH FUND may compare its
performance to the RUSSELL 2000 INDEX, described above.
In additon to the indices described above, SPECIAL EQUITY FUND may
compare its performance to the NASDAQ INDUSTRIAL INDEX, a computerized NASDAQ
sub-index system that provides brokers and dealers with price quotations for
securities not in bank, insurance, other finance, transportation or utilities
indices. NASDAQ quotations are published in the financial pages of most
newspapers.
In addition to the indices described above, REGIONAL EQUITY FUND may
compare its performance to the DAIN BOSWORTH REGIONAL INDEX, an index which
analyzes the performance of a specific group of stocks in the Midwest.
Dain Bosworth Incorporated publishes these results in Minneapolis newspapers.
In addition to the indices described above, BALANCED FUND may compare
its performance to that of the following indices:
* SHEARSON LEHMAN GOVERNMENT INDEX, which is an unmanaged index
comprised of all publicly issued, non-convertible domestic debt of the
U.S. government, or any agency thereof, or any quasi-federal
corporation and of corporate debt guaranteed by the U.S. government.
Only notes and bonds with a minimum outstanding principal of $1
million and a minimum maturity of one year are included.
* SHEARSON LEHMAN GOVERNMENT/CORPORATE (TOTAL) INDEX, which is comprised
of approximately 5,000 issues which include non-convertible bonds
publicly issued by the U.S. government or its agencies; corporate
bonds guaranteed by the U.S. government and quasi-federal
corporations; and publicly issued, fixed rate, non-convertible
domestic bonds of companies in industry, public utilities and finance.
The average maturity of these bonds approximates nine years. Tracked
by Shearson Lehman Brothers, Inc., the index calculates total returns
for one month, three month, twelve month and ten year periods and
year-to-date.
* SALOMON 90 DAY TREASURY BILL INDEX, which isa weekly quote of the most
representative yields for selected securities issued by the U.S.
Treasury and maturing in 90 days.
The FIXED INCOME FUNDS also may compare their performance to these indices.
TECHNOLOGY FUND may compare its performance to that of the LIPPER
SCIENCE & TECHNOLOGY FUND INDEX, which is a net value weighted index of the ten
largest mutual funds within the science and technology investment objective.
INTERNATIONAL FUND may compare its performance to that of the MORGAN
STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST ("EAFE") INDEX,
which is an aggregatge of 15 individual country indices that collectively
represent many of the major markets of the world, excluding the United States
and Canada.
TAXATION
The tax status of the Funds and the distributions that the Funds will
make to shareholders are summarized in the Prospectuses in the sections entitled
"Federal Income Taxes" (or, in the Prospectuses for the Tax Free Funds, "Income
Taxes"). Each Fund intends to fulfill the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), as a regulated
investment company. If so qualified, each Fund will not be liable for federal
income taxes to the extent it distributes its taxable income to its
shareholders.
To qualify under Subchapter M for tax treatment as a regulated
investment company, each Fund must, among other things: (1) derive at least 90%
of its gross income from dividends, interest, and certain other types of
payments related to its investment in stock or securities; (2) distribute to its
shareholders at least 90% of its investment company taxable income (as that term
is defined in the Code determined without regard to the deduction for dividends
paid) and 90% of its net tax-exempt income; (3) derive less than 30% of its
annual gross income from the sale or other disposition of stock, securities,
options, futures, or forward contracts held for less than three months; and (4)
diversify its holdings so that, at the end of each fiscal quarter of the Fund,
(a) at least 50% of the market value of the Fund's assets is represented by
cash, cash items, U.S. Government securities and securities of other regulated
investment companies, and other securities, with these other securities limited,
with respect to any one issuer, to an amount no greater than 5% of the Fund's
total assets and no greater than 10% of the outstanding voting securities of
such issuer, and (b) not more than 25% of the market value of the Fund's total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies).
Each Fund is subject to a nondeductible excise tax equal to 4% of the
excess, if any, of the amount required to be distributed for each calendar year
over the amount actually distributed. For this purpose, any amount on which the
Fund is subject to corporate-level income tax is considered to have been
distributed. In order to avoid the imposition of this excise tax, each Fund must
declare and pay dividends representing 98% of its net investment income for that
calendar year and 98% of its capital gains (both long-term and short-term) for
the twelve-month period ending October 31 of the calendar year.
Any loss on the sale or exchange of shares of a Fund generally will be
disallowed to the extent that a shareholder acquires or contracts to acquire
shares of the same Fund with 30 days before or after such sale or exchange.
Furthermore, if Fund shares with respect to which a long-term capital gain
distribution has been made are held for less than six months, any loss on the
sale or exchange of such shares will be treated as a long-term capital loss to
the extent of such long-term capital gain distribution. Furthermore, if a
shareholder of any of the Tax-Free Funds receives an exempt-interest dividend
from such fund and then disposes of his or her shares in such fund within six
months after acquiring them, any loss on the sale or exchange of such shares
will be disallowed to the extent of the exempt-interest dividend.
If one of the Tax-Free Funds disposes of a municipal obligation that it
acquired after April 30, 1993 at a market discount, it must recognize any gain
it realizes on the disposition as ordinary income (and not as capital gain) to
the extent of the accrued market discount.
For federal tax purposes, if a shareholder exchanges shares of a Fund
for shares of any other FAIF Fund pursuant to the exchange privilege (see
"Investing in the Funds -- Exchange Privilege" in the Prospectuses for Class A
and Class B Shares, and "Purchases and Redemptions of Shares -- Exchange
Privilege" in the Prospectuses for Class C Shares), such exchange will be
considered a taxable sale of the shares being exchanged. Furthermore, if a
shareholder of Retail Class Shares carries out the exchange within 90 days of
purchasing shares in a fund on which he or she has incurred a sales charge, the
sales charge cannot be taken into account in determining the shareholder's gain
or loss on the sale of those shares to the extent that the sales charge that
would have been applicable to the purchase of the later-acquired shares in the
other fund is reduced because of the exchange privilege. However, the amount of
any sales charge that may not be taken into account in determining the
shareholder's gain or loss on the sale of the first-acquired shares may be taken
into account in determining gain or loss on the eventual sale or exchange of the
later-acquired shares.
Dividends generally are taxable to shareholders at the time they are
paid. However, dividends declared in October, November and December, made
payable to shareholders of record in such a month and actually paid in January
of the following year are treated as paid and are thereby taxable to
shareholders as of December 31.
Except for the transactions the Fund has identified as hedging
transactions, each Fund is required for federal income tax purposes to recognize
as income for each taxable year its net unrealized gains and losses on forward
currency contracts as of the end of the year as well as those actually realized
during the year. Except for transactions in forward currency contracts that are
classified as part of a "mixed straddle," gain or loss recognized with respect
to forward currency contracts is considered to be 60% long-term capital gain or
loss and 40% short-term capital gain or loss, without regard to the holding
period of the contract. In the case of a transaction classified as a "mixed
straddle," the recognition of losses may be deferred to a later taxable year.
Sales of forward currency contracts that are intended to hedge against
a change in the value of securities or currencies held by a Fund may affect the
holding period of such securities or currencies and, consequently, the nature of
the gain or loss on such securities or currencies upon disposition.
It is expected that any net gain realized from the closing out of
forward currency contracts will be considered gain from the sale of securities
or currencies and therefore qualifying income for purposes of the 90% of gross
income from qualified sources requirement, as discussed above. In order to avoid
realizing excessive gains on securities or currencies held less than three
months, each Fund may be required to defer the closing out of forward currency
contracts beyond the time when it would otherwise be advantageous to do so. It
is expected that unrealized gains on forward currency contracts, which have been
open for less than three months as of the end of a Fund's fiscal year and which
are recognized for tax purposes, will not be considered gains on securities or
currencies held less than three months for purposes of the 30% test, as
discussed above.
Any realized gain or loss on closing out a forward currency contract
such as a forward commitment for the purchase or sale of foreign currency will
generally result in a recognized capital gain or loss for tax purposes. Under
Code Section 1256, forward currency contracts held by a Fund at the end of each
fiscal year will be required to be "marked to market" for federal income tax
purposes, that is, deemed to have been sold at market value. Code Section 988
may also apply to forward currency contracts. Under Section 988, each foreign
currency gain or loss is generally computed separately and treated as ordinary
income or loss. In the case of overlap between Sections 1256 and 988, special
provisions determine the character and timing of any income, gain or loss. The
Funds will attempt to monitor Section 988 transactions to avoid an adverse tax
impact.
Each Fund will distribute to shareholders annually any net long-term
capital gains that have been recognized for federal income tax purposes
(including unrealized gains at the end of the Fund's fiscal year) on forward
currency contract transactions. Such distributions will be combined with
distributions of capital gains realized on the Fund's other investments.
Pursuant to the Code, distributions of net investment income by a Fund
to a shareholder who, as to the United States, is a nonresident alien
individual, nonresident alien fiduciary of a trust or estate, foreign
corporation, or foreign partnership (a "foreign shareholder") will be subject to
U.S. withholding tax (at a rate of 30% or lower treaty rate). Withholding will
not apply if a dividend paid by a Fund to a foreign shareholder is 'effectively
connected" with a U.S. trade or business of such shareholder, in which case the
reporting and withholding requirements applicable to U.S. citizens or domestic
corporations will apply. Distributions of net long-term capital gains are not
subject to tax withholding but, in the case of a foreign shareholder who is a
nonresident alien individual, such distributions ordinarily will be subject to
U.S. income tax at a rate of 30% if the individual is physically present in the
U.S. for more than 182 days during the taxable year. Each Fund will report
annually to its shareholders the amount of any withholding.
The foregoing relates only to federal income taxation and is a general
summary of the federal tax law in effect as of the date of this Statement of
Additional Information.
RATINGS
A rating of a rating service represents that service's opinion as to
the credit quality of the rated security. However, such ratings are general and
cannot be considered absolute standards of quality or guarantees as to the
creditworthiness of an issuer. A rating is not a recommendation to purchase,
sell or hold a security, because it does not take into account market value or
suitability for a particular investor. Markets values of debt securities may
change as a result of a variety of factors unrelated to credit quality,
including changes in market interest rates.
When a security has been rated by more than one service, the ratings
may not coincide, and each rating should be evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the rating
services from other sources which they consider reliable. Ratings may be
changed, suspended or withdrawn as a result of changes in or unavailability of
such information, or for other reasons. In general, the Funds are not required
to dispose of a security if its rating declines after it is purchased, although
they may consider doing so.
RATINGS OF CORPORATE DEBT OBLIGATIONS AND MUNICIPAL BONDS
STANDARD & POOR'S CORPORATION
AAA: Securities rated AAA have the highest rating assigned by Standard
& Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA: Securities rated AA have a very strong capacity to pay interest
and repay principal and differ from the highest rated issues only to a
small degree.
A: Securities rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB: Securities rated BBB are regarded as having an adequate capacity
to pay interest and repay principal. Although such securities normally
exhibit adequate protection standards, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity
to pay interest and repay principal for securities in this category
than for those in higher rated categories.
Debt rated BB, B, CCC, CC, and C by Standard & Poor's is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
BB: Securities rated BB have less near-term vulnerability to default
than other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B: Securities rated B have a greater vulnerability to default but
currently have the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating.
CCC: Securities rated CCC have a currently identifiable vulnerability
to default, and are dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, they are not likely to have the capacity to pay interest
and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa: Securities which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected
by a large or exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Securities which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as high grade securities. They are rated lower than
the best securities because margins of protection may not be as large
as in Aaa securities, or fluctuation of protective elements may be of
greater magnitude, or there may be other elements present which make
the long-term risks appear somewhat greater than in Aaa securities.
A: Securities which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility
to impair-ment sometime in the future.
Baa: Securities which are rated Baa are considered as medium grade
obligations, being neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
securities lack outstanding investment characteristics, and in fact
have some speculative characteristics.
Ba: An issue which is rated Ba is judged to have speculative elements;
its future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes issues in this class.
B: An issue which is rated B generally lacks characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa: An issue which is rated Caa is of poor standing. Such an issue
may be in default or there may be present elements of danger with
respect to principal or interest.
Those securities in the Aa, A and Baa groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa-1, A-1 and
Baa-1. Other Aa, A and Baa securities comprise the balance of their respective
groups. These rankings (1) designate the securities which offer the maximum in
security within their quality groups, (2) designate securities which can be
bought for possible upgrading in quality, and (3) additionally afford the
investor an opportunity to gauge more precisely the relative attractiveness of
offerings in the marketplace.
RATINGS OF PREFERRED STOCK
STANDARD & POOR'S CORPORATION. Standard & Poor's ratings for preferred
stock have the following definitions:
AAA: An issue rated "AAA" has the highest rating that may be assigned
by Standard & Poor's to a preferred stock issue and indicates an
extremely strong capacity to pay the preferred stock obligations.
AA: A preferred stock issue rated "AA" also qualifies as a
high-quality fixed income security. The capacity to pay preferred
stock obligations is very strong, although not as overwhelming as for
issues rated "AAA."
A: An issue rated "A" is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions.
BBB: An issue rated "BBB" is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened
capacity to make payments for a preferred stock in this category than
for issues in the category.
MOODY'S INVESTORS SERVICE, INC. Moody's ratings for preferred stock
include the following:
aaa: An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
aa: An issue which is rated "aa" is considered a high grade preferred
stock. This rating indicates that there is reasonable assurance that
earnings and asset protection will remain relatively well maintained
in the foreseeable future.
a: An issue which is rate "a" is considered to be an upper medium
grade preferred stock. While risks are judged to be somewhat greater
than in the "aaa" and "aa" classifications, earnings and asset
protection are, nevertheless, expected to be maintained at adequate
levels.
baa: An issue which is rated "baa" is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any
great length of time.
RATINGS OF MUNICIPAL NOTES
STANDARD & POOR'S CORPORATION
SP-1: Very strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a
plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
SP-3: Speculative capacity to pay principal and interest.
None of the Funds will purchase SP-3 municipal notes.
MOODY'S INVESTORS SERVICE, INC. Generally, Moody's ratings for state
and municipal short-term obligations are designated Moody's Investment Grade
("MIG"); however, where an issue has a demand feature which makes the issue a
variable rate demand obligation, the applicable Moody's rating is "VMIG."
MIG 1/VMIG 1: This designation denotes the best quality. There is
strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for
refinancing.
MIG 2/VMIG 2: This designation denotes high quality, with margins of
protection ample although not so large as available in the preceding
group.
MIG 3/VMIG 3: This designation denotes favorable quality, with all
security elements accounted for, but lacking the strength of the
preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
None of the Funds will purchase MIG 3/VMIG 3 municipal notes.
RATINGS OF COMMERCIAL PAPER
STANDARD & POOR'S CORPORATION. Commercial paper ratings are graded into
four categories, ranging from "A" for the highest quality obligations to "D" for
the lowest. Issues assigned the A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation 1, 2 and 3 to indicate the relative degree of safety. The "A-1"
designation indicates that the degree of safety regarding timely payment is very
strong. Those issues determined to possess overwhelming safety characteristics
will be denoted with a plus (+) symbol designation. None of the Funds will
purchase commercial paper rated A-3 or lower.
MOODY'S INVESTORS SERVICE, INC. Moody's commercial paper ratings are
opinions as to the ability of the issuers to timely repay promissory obligations
not having an original maturity in excess of nine months. Moody's makes no
representation that such obligations are exempt from registration under the
Securities Act of 1933, and it does not represent that any specific instrument
is a valid obligation of a rated issuer or issued in conformity with any
applicable law. Moody's employs the following three designations, all judged to
be investment grade, to indicate the relative repayment capacity of rated
issuers:
PRIME-1: Superior capacity for repayment.
PRIME-2: Strong capacity for repayment .
PRIME-3: Acceptable capacity for repayment .
None of the Funds will purchase Prime-3 commercial paper.
BEST'S RATING SYSTEM FOR INSURANCE COMPANIES
The objective of Best's Rating System is to evaluate the various
factors affecting the overall performance of an insurance company in order to
provide an opinion as to the company's relative financial strength and ability
to meet its contractual obligations. The procedure includes both a quantitative
and qualitative review of the company.
The quantitative evaluation is based on an analysis of the company's
financial condition and operating performance utilizing a series of financial
tests. These tests measure a company's performance in the three critical areas
of Profitability, Leverage and Liquidity in comparison to the norms established
by the A.M. Best Company. These norms are based on an evaluation of the actual
performance of the insurance industry.
Best's review also includes a qualitative evaluation of the adequacy
and soundness of a company's reinsurance, the adequacy of its reserves and the
experience of its management. In addition, various other factors of importance
are considered such as the composition of the company's book of business and the
quality and diversification of its assets.
Upon completion of analysis, Best's Ratings are assigned to those
companies that meet the qualifications for rating. The Best's Rating
classifications are A+ (Superior); A & A- (Excellent); B+ (Very Good); B & B-
(Good); C+ (Fairly Good); and C & C- (Fair). Those not qualifying for a current
Best's Rating are classified in the "Not Assigned" category that has ten
classifications which identify why a company is not eligible for a Best's
Rating. Care should be exercised in the use of Best's Ratings without further
reference to additional Best's publications.
STATEMENT OF NET ASSETS----SEPTEMBER 30, 1994
LIMITED TERM INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
ASSET BACKED SECURITIES--80.3%
Auto Bond Receivables Trust 1993-1 A
6.125%, 11/15/98 $2,322 $2,266
BCI Home Equity Loan 1991-1 A1
7.100%, 09/15/06 127 127
BCI Home Equity Loan 1994-1 B (C)
5.663%, 10/29/94 3,112 3,124
Boulevard Auto Trust 1993-1 A
4.550%, 03/15/98 1,867 1,838
CFC Grantor Trust TR14 A (B)
7.150%, 11/15/06 1,208 1,194
Chemical Bank Grantor Trust 1988-B A
9.100%, 10/15/94 782 783
Chemical Financial Acceptance
Corporation 1991-A A
6.450%, 12/15/97 2,228 2,219
Comdisco Receivables Trust 1992-A A2
6.100%, 05/15/97 524 524
Household Finance Home Equity
Loan 1991-3 A3
6.100%, 11/20/06 3,312 3,285
Household Finance Home Equity
Loan 1992-1 A3
5.800%, 05/20/07 172 170
Merrill Lynch Home Equity Loan 1991-1A
7.600%, 05/15/16 404 404
Midlantic Automobile Grantor
Trust 1992-1 B
5.150%, 09/15/97 2,498 2,484
Olympic Automobile Receivables
Trust 1993-D A
4.650%, 07/15/00 3,488 3,387
Olympic Automobile
Receivables
Trust 1993-B A
4.950%, 10/15/99 3,256 3,180
Olympic Automobile Receivables
Trust 1993-C B
4.600%, 02/15/00 2,937 2,839
Orix Credit Alliance Owner
Trust 1993-A A2
4.300%, 08/17/98 3,394 3,324
Premier Auto Trust 1992-1 A (B)
5.750%, 07/15/97 1,035 1,032
Premier Auto Trust 1992-3 A
5.900%, 11/15/97 130 129
Premier Auto Trust 1992-5 A
4.550%, 03/15/98 2,635 2,569
Premier Auto Trust 1992-5 B
4.900%, 12/15/95 2,059 2,021
Premier Auto Trust 1993-4 A2
4.650%, 02/02/99 2,487 2,417
Premier Auto Trust 1993-4 B
4.950%, 02/02/99 $3,252 $3,161
RCI Vacation Ownership
Mortgage Trust 1991-B (B)
7.500%, 08/25/98 2,482 2,470
Security Pacific Home Equity 1991-A A1
8.250%, 03/10/06 95 95
The Money Store Home Equity
Trust 1992-D1 A1
6.500%, 01/15/04 2,003 1,979
The Money Store Home Equity
Trust 1993-B A1
5.400%, 08/15/05 3,920 3,845
Union Federal Savings Bank
Trust 1993-B A
4.450%, 11/15/99 2,486 2,425
Western Financial Grantor
Trust 1991-3 A
6.750%, 01/01/97 472 473
Western Financial Grantor
Trust 1993-2 A2
4.700%, 10/01/98 3,625 3,529
Western Financial Grantor
Trust 1993-4 A1
4.600%, 04/01/99 3,723 3,588
Zions Auto Trust 1993-1 B
5.650%, 06/15/99 3,242 3,170
TOTAL ASSET BACKED SECURITIES
(Cost $65,339) 64,051
OTHER MORTGAGE BACKED OBLIGATIONS--9.2%
Mortgage Capital Funding 1993-C1 A1
5.250%, 05/25/15 2,660 2,616
Mortgage Obligation Structured
Trust 1993-1 A1
6.350%, 10/25/18 2,120 2,070
Resolution Trust 1992-11 A1A
7.000%, 10/25/24 1,975 1,975
Resolution Trust 1992-C7 B
7.150%, 06/25/23 683 673
TOTAL OTHER MORTGAGE BACKED OBLIGATIONS
(Cost $7,465) 7,334
MASTER NOTES--10.2%
Associates Corporation of
North America (A)
4.813%, 10/04/94 1,367 1,367
Barclays (A)
4.779%, 10/03/94 2,243 2,243
Goldman Sachs (A)
4.950%, 10/04/94 2,207 2,207
Heller Financial
4.935%, 10/4/94 (A) $2,342 $ 2,342
TOTAL MASTER NOTES
(COST $8,159) 8,159
TOTAL INVESTMENTS--99.7%
(Cost $80,963) 79,544
OTHER ASSETS AND LIABILITIES--0.3%
OTHER ASSETS AND LIABILITIES 232
NET ASSETS
PORTFOLIO
SHARES--INSTITUTIONAL CLASS
($.0001 PAR VALUE--2 BILLION
AUTHORIZED) BASED ON 7,133,617
OUTSTANDING SHARES 71,349
PORTFOLIO SHARES--RETAIL CLASS
A ($.0001 PAR VALUE--2 BILLION
AUTHORIZED) BASED ON 965,349
OUTSTANDING SHARES 9,750
PORTFOLIO SHARES--RETAIL CLASS
B ($.0001 PAR VALUE--2 BILLION
AUTHORIZED) BASED ON 102
OUTSTANDING SHARES 1
UNDISTRIBUTED NET INVESTMENT
INCOME 72
ACCUMULATED NET REALIZED GAIN
ON INVESTMENTS 23
NET UNREALIZED DEPRECIATION OF
INVESTMENTS (1,419)
TOTAL NET ASSETS:--100.0% $79,776
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $ 9.85
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS A $ 9.85
MAXIMUM SALES CHARGE OF 2.00% (1) .20
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 10.05
NET ASSET VALUE AND OFFERING
PRICE PER SHARE--RETAIL CLASS
B (2) $ 9.84
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
(B) Security sold within terms of a private placement memorandum, exempt from
registration under section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited
investors." These securities have been determined to be liquid under the
guidelines established by the Board of Directors.
(C) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.00%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TERM INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
ASSET BACKED SECURITIES--9.6%
BW Home Equity Trust 1990-1 1
9.250%, 09/15/05 $ 34 $ 35
Chemical Financial Acceptance 1991-A 1
6.450%, 12/15/97 813 810
Fleet Finance Home Equity 1990-1
8.900%, 01/16/06 140 142
Household Finance Home
Equity 1993-2 A3
4.650%, 12/20/08 3,013 2,866
Olympic Auto Receivables Trust 1993-D
4.750%, 07/15/00 2,557 2,480
Olympic Auto Receivables Trust 1994-A
5.700%, 01/15/01 563 552
TOTAL ASSET BACKED SECURITIES
(COST $7,110) 6,885
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--8.9%
FHLMC
6.000%, 11/15/08 3,500 2,973
7.550%, 05/15/20 731 734
8.000%, 10/15/20 2,630 2,645
FNMA
14.750%, 03/01/12 1 1
U.S. GOVERNMENT AGENCY MORTGAGE BACKED
OBLIGATIONS (Cost $6,803) 6,353
OTHER MORTGAGE BACKED OBLIGATIONS--10.4%
Drexel Burnham Lambert Trust S2
9.000%, 08/01/18 108 110
GECMS 1994-12 A4
6.000%, 04/25/09 2,925 2,642
Kidder Peabody Mortgage Assets Trust 6F
7.950%, 07/20/18 876 881
MDC Mortgage Funding P3
8.200%, 11/20/17 34 34
Morgan Stanley Mortgage Trust W5
9.050%, 05/01/18 202 206
Prudential Home Mortgage
Securities 1992-6 A3
7.000%, 04/25/99 2,100 2,051
Resolution Trust 1991-M6 B2
7.000%, 06/25/21 1,535 1,517
OTHER MORTGAGE BACKED OBLIGATIONS
(Cost $7,498) 7,441
U.S. TREASURY OBLIGATIONS--55.1%
U.S. Treasury Note
4.625%, 02/15/96 $ 6,055 $ 5,924
5.750%, 10/31/97 7,565 7,313
5.125%, 11/30/98 11,015 10,206
6.375%, 01/15/00 4,230 4,060
6.250%, 02/15/03 13,065 11,999
U.S. TREASURY OBLIGATIONS
(Cost $40,512) 39,502
CORPORATE OBLIGATIONS--7.4%
Bear Stearns
6.500%, 06/15/00 2,800 2,573
Farmers Group
8.250%, 07/15/96 320 326
GMAC
7.650%, 01/16/98 2,385 2,385
CORPORATE OBLIGATIONS (Cost $5,701) 5,284
MASTER NOTES--8.8%
Associates Corporation of North America
4.813%, 10/04/94 (A) 1,631 1,631
Barclays
4.779%, 10/03/94 (A) 1,364 1,364
Goldman Sachs
4.950%, 10/04/94 (A) 1,433 1,433
Heller Financial
4.935%, 10/04/94 (A) 1,915 1,915
MASTER NOTES (Cost $6,343) 6,343
TOTAL INVESTMENTS--100.2%
(Cost $73,967) 71,808
OTHER ASSETS AND LIABILITIES--(0.2%)
OTHER ASSETS AND LIABILITIES, NET (155)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
7,163,523 outstanding
shares $71,418
Portfolio
shares--Retail Class
A $.0001 par value--2
billion authorized)
based on 335,760
outstanding shares 3,367
Accumulated net
realized loss on
investments (973)
Net unrealized
depreciation of
investments (2,159)
TOTAL NET
ASSETS:--100.0% $71,653
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 9.55
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.55
MAXIMUM SALES CHARGE
OF 3.75%+ .37
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 9.92
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or the demand date.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors". Pursuant to guidelines adopted by the Board of
Directors, this issue is determined to be liquid.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GMAC--General Motors Acceptance Corporation
GECMS--General Electric Capital Marketing Service
The accompanying notes are an integral part of the financial statements.
FIXED INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
U.S. TREASURY OBLIGATIONS--72.9%
U.S. Treasury Bond
7.250%, 08/15/22 $23,730 $21,886
U.S. Treasury Note
4.625%, 02/15/96 15,335 15,002
5.750%, 10/31/97 3,080 2,977
5.125%, 02/28/98 5,000 4,710
5.125%, 11/30/98 10,990 10,182
6.000%, 10/15/99 2,250 2,130
6.375%, 01/15/00 3,000 2,879
6.250%, 02/15/03 12,195 11,201
U.S. Treasury STRIPS
02/15/99 1,055 773
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $74,260) 71,740
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--1.2%
FHLMC
6.000%, 11/15/08 1,275 1,083
8.000%, 06/15/20 1 1
FNMA
8.500%, 08/25/18 100 102
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE BACKED OBLIGATIONS
(Cost $1,338) 1,186
CORPORATE DEBT OBLIGATIONS--8.7%
Bear Stearns
9.125%, 04/15/98 1,000 1,043
8.750%, 03/15/04 1,000 1,009
Farmers Group
8.250%, 07/15/96 1,755 1,790
General Foods
6.000%, 06/15/01 1,440 1,289
General Motors Acceptence
6.150%, 05/11/98 2,025 1,925
Morgan Stanley Group
7.320%, 01/15/97 250 251
Nationsbank
7.750%, 08/15/04 1,000 955
Torchmark
9.625%, 05/01/98 250 263
TOTAL CORPORATE DEBT OBLIGATIONS
(Cost $8,752) 8,525
OTHER MORTGAGE BACKED OBLIGATIONS--9.7%
Collateralized Mortgage
Securities 88-13 C
8.000%, 09/20/19 152 152
Countrywide Mortgage Backed
Securities 1994-G A3
6.500%, 04/25/24 $ 2,380 $ 2,164
Drexel Burnham Lambert Trust S-2
9.000%, 08/01/18 941 961
General Electric Capital Marketing
Services 1994-12 A4
6.000%, 04/25/09 3,125 2,824
Morgan Stanley Mortgage
Trust W-5
9.050%, 05/01/18 48 49
Prudential Home Mortgage
Securities 1992-6 A3
7.000%, 04/25/99 900 879
Residential Funding 1992-36 A2 P11
5.700%, 11/25/07 1,348 1,303
Resolution Trust 1991-M6 B2
7.000%, 06/25/21 (B) 1,212 1,198
TOTAL OTHER MORTGAGE BACKED
OBLIGATIONS (Cost $9,774) 9,530
ASSET BACKED SECURITIES--1.3%
BW Home Equity Trust 1990-1 1
9.250%, 09/15/05 110 111
Dillon Reed Structured Finance
1993-K1 A1
6.660%, 08/15/10 602 507
Olympic Auto Receivables Trust 1994-A
5.700%, 01/15/01 724 710
TOTAL ASSET BACKED SECURITIES
(Cost $1,367) 1,328
MASTER NOTES--7.9%
Associates Corporation of North America
4.813%, 10/04/94 (A) 2,553 2,553
Goldman Sachs
4.950%, 10/04/94 (A) 2,824 2,824
Heller Financial
4.935%, 10/04/94 (A) 2,361 2,361
TOTAL MASTER NOTES
(Cost $7,738) 7,738
REPURCHASE AGREEMENTS--4.8%
J.P. Morgan 4.594%, dated 09/30/94, matures
10/03/94, repurchase price $2,245,296
(collateralized by a U.S. Treasury Note,
par value $12,149,025, maturity 02/15/15,
market value $2,289,362) 2,244
Merrill Lynch 4.562%, dated 09/30/94,
matures 10/03/94, repurchase price
$2,431,224 (collateralized by a U.S.
Treasury Note, par value $2,470,486,
interest rate of 4.25%, maturity of
01/31/95, market value of $2,479,392) $ 2,431
TOTAL REPURCHASE AGREEMENTS
(Cost $4,675) 4,675
TOTAL INVESTMENTS--106.5%
(Cost $107,904) 104,722
OTHER ASSETS AND LIABILITIES--(6.5%)
OTHER ASSETS AND LIABILITIES, NET (6,392)
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 8,700,311 outstanding shares 93,441
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
774,206 outstanding shares 8,473
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based on
11,135 outstanding shares 116
Undistributed net investment income 6
Accumulated net realized loss on
investments (524)
Net unrealized depreciation
of investments (3,182)
TOTAL NET ASSETS:--100.0% $ 98,330
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 10.37
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.37
MAXIMUM SALES CHARGE OF 3.75% (1) .40
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.77
NET ASSET VALUE AND OFFERING
PRICE PER SHARE--RETAIL CLASS B (2) $ 10.35
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or the demand date.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
STRIPS--Separately Trading of Registered Interest and Prinicpal of
Securities
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
MANAGED INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
ASSET BACKED SECURITIES--14.6%
Capital Auto Receivable Asset
Trust, A 1993-1
5.850%, 02/15/98 $1,312 $1,291
HFC Home Equity Loan Trust,
1992-2
6.850%, 11/20/12 2,241 2,196
Leasing Solution Receivable,
1994-1
5.575%, 03/15/99 1,770 1,752
Orix Credit Alliance Owner Trust,
1993-A
4.600%, 08/17/98 2,263 2,214
TOTAL ASSET BACKED SECURITIES
(Cost $7,514) 7,453
CORPORATE OBLIGATIONS--62.0%
AEROSPACE & DEFENSE--1.5%
Lockheed
4.570%, 05/11/95 750 744
AUTO/RENTAL--1.0%
Hertz
8.000%, 04/01/95 500 504
BANKING--3.0%
Citicorp
8.625%, 11/15/94 500 501
Fleet/Norstar Financial Group
10.200%, 09/15/95 1,000 1,034
TOTAL BANKING 1,535
BUSINESS CREDIT--3.9%
International Lease & Finance
7.000%, 11/07/94 500 501
Xerox Credit
9.500%, 11/01/94 500 501
5.375%, 07/15/95 1,000 992
TOTAL BUSINESS CREDIT 1,994
CHEMICALS--1.0%
7.830%, 05/09/95 500 505
ENERGY & POWER UTILITIES--4.7%
Houston Light & Power
8.625%, 01/15/96 1,000 1,024
Pacific Gas & Electric
4.500%, 06/01/96 725 699
Pacificorp
8.410%, 02/01/95 700 704
TOTAL ENERGY & POWER UTILITIES 2,427
FINANCE--2.0%
Heller Financial
6.500%, 11/15/95 1,000 998
FINANCE - RECEIVABLES--1.9%
IBM Credit
5.130%, 08/11/95 $1,000 $ 990
FOOD & BEVERAGE--2.0%
ConAgra
9.190%, 06/30/95 1,000 1,020
INSURANCE--2.8%
Provident Life Capital
9.650%, 12/01/94 1,425 1,432
MACHINERY--1.5%
Tenneco
9.625%, 11/15/94 750 754
MEDICAL PRODUCTS & SERVICES--1.0%
Baxter International
8.200%, 04/01/95 500 504
PAPER & PAPER PRODUCTS--0.9%
International Paper
9.625%, 10/15/95 450 465
PERSONAL CREDIT--10.3%
American General Finance
9.500%, 12/15/94 750 755
7.300%, 10/16/95 500 504
Beneficial
6.060%, 06/30/95 1,000 999
Commercial Credit Group
6.950%, 10/01/94 500 500
Discover Credit
6.680%, 05/15/95 500 502
Household Finance
9.250%, 04/01/95 500 501
ITT Financial
7.125%, 10/01/94 1,000 1,002
Nordstrom Credit
8.750%, 03/20/95 500 504
TOTAL PERSONAL CREDIT 5,267
PETROLEUM REFINING--2.0%
Ashland Oil
9.875%, 09/01/95 500 514
Atlantic Richfield
10.375%, 07/15/95 500 516
TOTAL PETROLEUM REFINING 1,030
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--1.4%
Eastman Kodak
9.200%, 01/15/95 700 705
RAILROADS--0.5%
Union Pacific
9.160%, 09/25/95 $ 250 $ 256
RETAIL--4.9%
Dayton Hudson
4.820%, 04/01/96 1,000 970
Super Valu Stores
5.875%, 11/15/95 750 743
Wendy's International
12.125%, 04/01/95 750 767
TOTAL RETAIL 2,480
SECURITY & COMMODITY BROKERS--9.3%
Goldman Sachs
7.000%, 11/29/94 1,170 1,171
Lehman Brothers
12.500%, 10/15/94 615 616
6.000%, 12/30/94 1,000 1,000
Salomon
4.600%, 01/15/95 1,000 995
4.800%, 05/15/95 1,000 990
TOTAL SECURITY & COMMODITY BROKERS 4,772
SEMI-CONDUCTORS & RELATED DEVICES--1.1%
Intel Overseas, Zero
Coupon
0.00%, 05/15/95 608 584
TELEPHONES & TELECOMMUNICATION--1.5%
Southwestern Bell
9.000%, 07/17/95 750 762
TOBACCO--3.8%
Philip Morris
6.250%, 06/05/95 1,000 1,000
8.875%, 07/01/96 900 927
TOTAL TOBACCO 1,927
TOTAL CORPORATE OBLIGATIONS
(Cost $33,146) 31,655
FLOATING RATE CORPORATE NOTES--7.8%
Chemical Banking
5.237%, 02/15/95 (A) 1,000 1,000
Citicorp
8.633%, 12/15/95 (A) 1,000 1,002
FNMA
4.910%, 04/16/95 (A) 1,000 999
Lockheed
5.325%, 05/11/95 (A) 1,000 1,000
TOTAL FLOATING RATE CORPORATE NOTES
(Cost $4,062) 4,001
U.S. GOVERNMENT AGENCY OBLIGATIONS--1.9%
FHLMC
4.750%, 01/15/01 $1,000 $ 963
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost $1,004) 963
MASTER NOTES--11.7%
Associates Corporation of North America
4.813%, 10/04/94 (B) 1,355 1,355
Barclays Bank
4.779%, 10/03/94 (B) 1,554 1,554
Goldman Sachs
4.950%, 10/04/94 (B) 1,375 1,375
Heller Financial
4.935%, 10/04/94 (B) 1,695 1,695
TOTAL MASTER NOTES (Cost $5,979) 5,979
TOTAL INVESTMENTS--98.0%
(Cost $51,705) 50,051
OTHER ASSETS AND LIABILITIES--2.0%
OTHER ASSETS AND LIABILITIES, NET 1,014
NET ASSETS
PORTFOLIO SHARES--INSTITUTIONAL CLASS (NO
PAR VALUE--UNLIMITED AUTHORIZATION) BASED
ON 4,735,847 OUTSTANDING SHARES 48,140
PORTFOLIO SHARES--RETAIL CLASS A (NO PAR
VALUE--UNLIMITED AUTHORIZATION) BASED ON
631,025 OUTSTANDING SHARES 6,451
UNDISTRIBUTED NET INVESTMENT INCOME 8
ACCUMULATED NET REALIZED LOSS IN
INVESTMENTS (1,880)
NET UNREALIZED DEPRECIATION OF INVESTMENTS (1,654)
TOTAL NET ASSETS:--100.0% $51,065
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 9.51
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.52
MAXIMUM SALES CHARGE OF 2.00%+ .19
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 9.71
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.00%.
(A) Floating Rate Notes--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994.
(B) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE GOVERNMENT BOND FUND
DESCRIPTION PAR (000) VALUE (000)
U.S. TREASURY OBLIGATIONS--79.6%
U.S. Treasury Notes
5.875%, 05/15/95 $1,750 $1,752
5.125%, 11/15/95 500 495
6.125%, 07/31/96 1,000 992
6.250%, 08/31/96 2,500 2,483
6.500%, 05/15/97 1,000 991
6.500%, 08/15/97 3,000 2,967
5.750%, 10/31/97 650 628
5.625%, 01/31/98 550 527
7.875%, 04/15/98 3,000 3,073
7.125%, 10/15/98 1,000 1,001
5.125%, 11/30/98 605 561
6.375%, 01/15/99 100 97
6.750%, 05/31/99 500 490
6.875%, 07/31/99 2,000 1,968
7.125%, 09/30/99 700 695
7.875%, 08/15/01 1,000 1,023
7.500%, 11/15/01 2,000 2,003
7.500%, 05/15/02 1,000 1,000
6.375%, 08/15/02 500 466
6.250%, 02/15/03 500 459
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $23,943) 23,671
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--10.9%
FHLB
7.750%, 04/25/96 510 519
7.750%, 02/26/97 1,000 1,018
6.975%, 07/26/99 1,000 980
7.440%, 08/10/01 750 740
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS (Cost $3,309) 3,257
REPURCHASE AGREEMENTS--6.0%
J.P. Morgan 4.594%, dated 09/30/94, matures
10/03/94, repurchase price $721,133
(collateralized by a Treasury Interest
Strip Coupon, total par value $3,901,963,
matures 02/15/15, market value $735,286) 721
Merrill Lynch 4.562%, dated 09/30/94,
matures 10/03/94, repurchase price
$1,061,343 (collateralized by U.S. Treasury
Note, total par value $1,078,483, matures
01/31/95, market value $1,082,371) 1,061
TOTAL REPURCHASE AGREEMENTS
(Cost $1,782) 1,782
TOTAL INVESTMENTS--96.5% (Cost $29,034) 28,710
OTHER ASSETS AND LIABILITIES--3.5%
OTHER ASSETS AND LIABILITIES, NET 1,043
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
3,093,853 outstanding
shares $28,079
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 220,225
outstanding shares 2,077
Accumulated net
realized loss on
investments (79)
Net unrealized
depreciation of
investments (324)
TOTAL NET
ASSETS:--100.0% $29,753
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 8.98
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 8.98
MAXIMUM SALES CHARGE OF 3.00%+ .28
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 9.26
+ The offer price is calculated by dividing the net asset value per share by
1 minus the maximum sales charge of 3.00%.
FHLB--Federal Home Loan Bank
The accompanying notes are an integral part of the financial statements.
MORTGAGE SECURITIES FUND
DESCRIPTION PAR (000) VALUE (000)
U.S. GOVERNMENT AGENCY MORTGAGE
BACKED OBLIGATIONS--75.8%
FHLMC
7.250%, 12/01/98 $147 $137
7.750%, 10/01/01 95 91
8.500%, 10/01/01 72 73
8.500%, 05/15/05 615 616
7.400%, 10/15/05 1,550 1,484
6.250%, 12/15/06 1,000 896
6.500%, 09/01/07 286 255
8.000%, 04/01/08 352 342
8.000%, 10/01/08 170 165
6.000%, 11/15/08 615 522
8.750%, 09/01/09 458 465
8.500%, 01/01/10 145 144
14.500%, 02/01/11 2 2
8.000%, 06/01/16 106 103
9.000%, 07/01/16 67 68
8.000%, 10/01/16 162 157
7.500%, 11/01/16 115 109
5.000%, 11/15/17 1,500 1,359
FNMA
8.000%, 08/01/96 12 12
9.148%, 06/01/97 (B) 44 44
6.000%, 10/25/98 1,636 1,605
5.750%, 11/25/98 1,239 1,200
8.000%, 05/01/08 235 229
6.000%, 06/25/08 1,300 1,077
7.000%, 11/25/10 191 181
14.750%, 03/01/12 63 72
5.900%, 07/25/15 1,500 1,370
8.250%, 07/25/15 1,662 1,694
8.500%, 01/01/17 220 221
7.500%, 04/01/18 136 129
8.500%, 08/25/18 700 715
7.000%, 10/25/19 1,500 1,378
6.750%, 11/25/19 1,000 940
5.000%, 05/25/23 1,400 1,254
GNMA
10.250%, 05/15/98 64 70
10.750%, 09/15/98 47 51
10.750%, 10/15/00 127 138
10.750%, 01/15/01 138 151
6.500%, 06/15/03 180 158
8.000%, 08/15/06 133 129
8.000%, 08/15/07 217 211
8.500%, 07/15/08 38 38
8.500%, 08/15/08 276 276
9.500%, 08/15/09 14 15
14.000%, 10/15/12 9 11
12.000%, 03/15/14 63 72
12.000%, 03/15/15 $ 28 $ 32
12.000%, 04/15/15 26 29
12.000%, 06/15/15 47 54
10.000%, 03/15/16 38 41
9.500%, 09/15/16 200 211
9.000%, 10/15/16 21 21
9.000%, 02/15/17 445 457
9.500%, 11/15/18 440 463
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE BACKED OBLIGATIONS
(Cost $22,926) 21,737
OTHER MORTGAGE BACKED OBLIGATIONS--16.6%
American Housing Trust 3 B
7.500%, 08/25/12 1,250 1,237
Bear Stearns Secured Investors
Trust 1991-2 E
7.500%, 12/20/98 1,500 1,512
Collateralized Mortgage Obligation
Trust 63 D
9.000%, 04/20/97 1,449 1,486
Morgan Stanley Mortgage Trust W 5
9.050%, 05/01/18 513 524
TOTAL OTHER MORTGAGE BACKED OBLIGATIONS (Cost
$4,807) 4,759
MASTER NOTES--6.6%
Goldman Sachs
4.950%, 10/04/94 (A) 823 823
Heller Financial
4.935%, 10/04/94 (A) 1,068 1,068
TOTAL MASTER NOTES (Cost $1,891) 1,891
TOTAL INVESTMENTS--99.0%
(Cost $29,624) 28,387
OTHER ASSETS AND LIABILITIES--1.0%
OTHER ASSETS AND LIABILITIES, NET 287
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
2,926,027 outstanding
shares $29,706
Portfolio
shares--Retail Class
A ($.0001 par
value--2 billion
authorized) based on
26,373 outstanding
shares 267
Accumulated net
realized loss on
investments (62)
Net unrealized
depreciation of
investments (1,237)
TOTAL NET
ASSETS:--100.0% $28,674
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 9.71
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.71
MAXIMUM SALES CHARGE
OF 3.75%+ .38
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 10.09
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
(B) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994.
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
FHLMC--Federal Home Loan Mortgage Corporation
The accompanying notes are an integral part of the financial statements.
LIMITED TERM TAX FREE INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--97.0%
ALASKA--2.7%
Anchorage, Telephone Utility (RB)
(AMBAC)
3.500%, 12/01/96 $250 $244
Spring Creek, Correctional Center,
Series A, Prerefunded @ 102 (COP) (CGIC)
9.500%, 10/01/95 200 214
TOTAL ALASKA 458
CALIFORNIA--14.9%
Los Angeles, Series A (GO)
4.750%, 02/01/95 250 250
San Francisco, Port Commission (RB)
4.400%, 07/01/96 500 496
San Marcos, Zero Coupon (COP)
0.000%, 03/02/95 300 295
Sonoma County (COP)
4.600%, 08/01/96 470 468
State (GO)
6.000%, 05/01/97 500 512
State, Series C (RAN)
5.750%, 04/25/96 500 506
TOTAL CALIFORNIA 2,527
GEORGIA--3.1%
Cobb County and Marietta, Water
Authority, Prerefunded @ 102 (RB)
9.000%, 11/01/95 250 267
Cobb County, School District (GO)
6.125%, 02/01/96 250 256
TOTAL GEORGIA 523
ILLINOIS--7.0%
State Development Finance Authority,
School District, Zero Coupon (GO)
(FGIC)
0.000%, 12/01/96 455 411
State Educational Facilities
Authority, Art Institute Of Chicago
(RB)
3.900%, 03/01/95 225 224
State Educational Facilities
Authority, Columbia College (RB)
4.000%, 12/01/94 155 155
State Metropolitan Pier & Exposition
Authority, Zero Coupon (RB) (AMBAC)
0.00%, 12/15/94 200 199
State Sales Tax, Series S (RB)
3.250%, 06/15/95 200 199
TOTAL ILLINOIS 1,188
INDIANA--2.9%
Indianapolis, Local Public
Improvement, Series A (RB)
4.850%, 01/10/95 $215 $ 216
New Albany, Sewer Works (RB) (AMBAC)
5.200%, 09/01/95 270 272
TOTAL INDIANA 488
KENTUCKY--1.6%
Kenton County, Hospital Facilities,
Saint Elizabeth Medical Center,
Prerefunded @ 102 (RB) (AMBAC)
9.300%, 11/01/95 250 268
LOUISIANA--2.3%
State Deepwater Port Authority,
Series B (RB)
4.600%, 09/01/95 200 200
State Public Facilities Authority,
St. Francis Medical Center Project
(RB) (FSA)
3.550%, 07/01/96 200 197
TOTAL LOUISIANA 397
MAINE--2.9%
State Highway Authority (RB)
6.000%, 04/15/96 480 491
MASSACHUSETTS--4.1%
State Housing Finance Agency, Insured
Rental Housing, Series A (RB) (AMBAC)
(AMT)
4.900%, 01/01/97 250 248
State Port Authority, Series A (RB)
3.600%, 07/01/95 250 249
State Water Resource Authority (RB)
4.125%, 10/15/95 200 200
TOTAL MASSACHUSETTS 697
MINNESOTA--10.5%
Fridley, Commercial Developement,
Mandatory Put @ 100 (RB) (NBOC)
4.900%, 09/01/96 235 234
Minneapolis, Special School District
#001 (COP)
4.750%, 06/01/96 300 299
Minnetonka, Multifamily Housing,
Southampton Apartments Project,
Mandatory Put @ 100 (RB) (NBOC)
4.750%, 06/01/95 500 500
Southern Municipal Power Agency, Series
B (RB)
4.500%, 01/01/96 $500 $ 498
Western Municipal Power Agency, Series
A, Prerefunded @ 102 (RB)
9.500%, 01/01/96 225 243
TOTAL MINNESOTA 1,774
NEBRASKA--3.5%
Omaha, Public Power District, Series B (RB)
3.400%, 02/01/95 300 299
Omaha, Public Power District,
Series D (RB)
3.300%, 02/01/95 300 299
TOTAL NEBRASKA 598
NEVADA--1.9%
Las Vegas Valley, Water Distribution
(RB) (AMBAC)
9.500%, 08/01/95 300 314
NEW MEXICO--1.8%
Albuquerque Airport, Gross Receipts Tax
(RB)
8.250%, 07/01/95 300 309
NEW YORK--1.6%
State Medical Care Facilities, Series
A, Prerefunded @ 102 (RB) (AMBAC)
8.500%, 01/15/96 250 268
NORTH DAKOTA--1.9%
Cass County, Hospital Facility,
Mandatory Sinking Fund (RB)
8.500%, 09/01/97 300 314
OHIO--1.2%
State Building Authority (RB)
3.250%, 04/01/95 200 199
RHODE ISLAND--5.9%
Pawtucket (GO) (FGIC)
7.750%, 04/15/97 750 796
State (GO)
6.900%, 06/15/95 200 204
TOTAL RHODE ISLAND 1,000
SOUTH CAROLINA--1.6%
Florence County, Mcleod Regional
Medical Center Project, Series B,
Prerefunded @ 102 (RB) (FGIC)
8.300%, 11/01/95 250 265
TENNESSEE--1.6%
State Local Developement Authority, Community
Provider Loan Program (RB)
4.600%, 10/01/96 $275 $ 273
TEXAS--10.8%
Dallas, Waterworks & Sewer (RB)
8.200%, 04/01/97 500 538
Panhandle Plains, Higher Education
Authority, Mandatory Put
@ 100 (RB) (SLMA)
3.650%, 03/02/95 300 300
San Antonio (GO)
8.000%, 08/01/95 250 258
State (GO)
6.700%, 12/01/96 320 336
State, Prerefunded @ 100 (GO)
8.000%, 10/01/95 200 207
Texas Tech University (RB)
3.350%, 02/15/95 200 199
TOTAL TEXAS 1,838
UTAH--1.9%
State Intermountain Power Agency, 1985
Series A, Prerefunded @ 102.50 (RB)
9.250%, 07/01/95 300 319
VIRGINIA--2.6%
Fairfax County, Water Authority (RB)
3.350%, 04/01/96 250 245
Virginia Beach (GO)
3.350%, 07/15/95 200 199
TOTAL VIRGINIA 444
WASHINGTON--6.4%
Seattle, Municipal Power & Light (RB)
3.450%, 05/01/95 300 298
South Columbia Basin (RB)
4.800%, 12/01/95 200 201
State Public Power Supply, Nuclear
Project #3, Series C (RB)
3.500%, 07/01/95 300 298
State, Series R-94A (GO)
3.400%, 08/01/95 300 297
TOTAL WASHINGTON 1,094
WISCONSIN--2.3%
Kenosha, Public And Miscellaneous Improvements,
Series A, Promissory
Notes, (GO) (AMBAC)
3.800%, 04/01/95 200 200
Milwaukee (GO)
3.750%, 06/15/95 $200 $ 199
TOTAL WISCONSIN 399
TOTAL MUNICIPAL BONDS (Cost $16,525) 16,445
CASH EQUIVALENTS--1.1%
Federated Minnesota Municipal
Cash Trust (A)
3.304%, 10/07/94 55 55
Federated Tax Free Money Market (A)
3.294%, 10/07/94 125 125
TOTAL CASH EQUIVALENTS (Cost $180) 180
TOTAL INVESTMENTS--98.1%
(Cost $16,705) 16,625
OTHER ASSETS AND LIABILITIES--1.9%
OTHER ASSETS AND LIABILITIES, NET 323
NET ASSETS
Portfolio shares--Institutional Class (no par
value--unlimited authorization) based on
1,643,218 outstanding shares 16,441
Portfolio shares--Retail Class a (no par
value--unlimited authorization) based on 60,241
outstanding shares 602
ACCUMULATED NET REALIZED LOSS ON INVESTMENTS (15)
NET UNREALIZED DEPRECIATION OF INVESTMENTS (80)
TOTAL NET ASSETS:--100.0% $16,948
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.95
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.95
MAXIMUM SALES CHARGE OF 2.00%+ .20
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.15
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.00%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
GO--General Obligation
RB--Revenue Bond
COP--Certificates of Participation
RAN--Revenue Anticipation Notes
AMT--Alternative Minimum Tax
AMBAC--American Municipal Bond Assurance Company
SLMA--Student Loan Marketing Association
NBOC--National Bank of Canada
FGIC--Financial Guaranty Insurance Corporation
FSA--Financial Security Assurance
CGIC--Capital Guaranty Insurance Company
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TAX FREE FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--93.4%
ALABAMA--1.3%
Jefferson County, Sewer System
(RB) (MBIA)
5.000%, 09/01/01 $100 $ 98
CALIFORNIA--11.0%
Contra Costa, Water Authority, Callable 10/01/04
@ 102 (RB) (MBIA)
5.800%, 10/01/07 200 196
Orange County, Transportation
Authority, Callable 02/15/02
@ 102 (RB)
5.700%, 02/15/03 200 202
San Diego, Callable 01/01/04
@ 101 (RB)
5.625%, 01/01/06 200 198
State Health Facilities Authority,
Callable 10/01/98 @ 102 (RB) (CMI)
7.250%, 10/01/99 200 209
TOTAL CALIFORNIA 805
COLORADO--1.9%
Aurora, Single Family Mortgage,
Series 1993-A (RB)
3.875%, 05/01/00 60 59
Colorado Springs, Utilities, Series A,
Prerefunded @ 100 (RB)
8.000%, 05/15/97 20 22
Denver, City & County Refunding,
Callable 09/01/01 @ 100 (RB)
5.100%, 09/01/05 60 57
TOTAL COLORADO 138
FLORIDA--0.4%
Dade County, Senior High School
Facilities, Series A, Callable 07/01/95
@ 102 (COP) (LOC: Sumitomo Bank)
6.900%, 07/01/97 15 15
North Brevard County, Health, Hospital,
And Nursing Home Improvements, Jess
Parish Memorial Hospital (RB) (AMBAC)
6.800%, 09/01/96 15 16
TOTAL FLORIDA 31
GEORGIA--0.2%
State Municipal Electric Power
Authority, Series P (RB)
7.200%, 01/01/98 15 16
IDAHO--1.5%
State Health Facilities Authority, Saint
Joseph Medical Center (RB) (MBIA)
4.950%, 07/01/06 $100 $ 93
State Housing Agency, Single Family
Mortgage (RB)
5.900%, 07/01/99 15 15
TOTAL IDAHO 108
ILLINOIS--6.0%
Central Lake County, Joint Action Water
Agency (RB) (FGIC)
5.100%, 05/01/03 100 95
Chicago, Public Improvements, Series A
(GO) (AMBAC)
4.700%, 01/01/98 25 25
Lake County, Water & Sewer System,
Series A, Prerefunded @ 100 (RB) (AMBAC)
6.800%, 12/01/01 25 27
Lansing, Sales Tax, Callable @ 102
12/01/02 (RB) (AMBAC)
5.350%, 12/01/04 200 196
Rockford, Park District, Series B,
Callable 01/01/99 @ 100 (GO)
4.400%, 01/01/00 75 70
Springfield, Miscellaneous Improvements
(GO)
6.550%, 12/01/98 25 26
TOTAL ILLINOIS 439
INDIANA--2.6%
Perry Township, Multi-school Building,
Escrowed To Maturity (RB) (STAID)
7.000%, 07/01/97 15 16
Tippecanoe County, Lafayette Building
Authority (RB)
4.750%, 01/01/00 100 97
Transportation Authority,
Series A (RB)
5.400%, 12/01/97 75 76
TOTAL INDIANA 189
IOWA--1.9%
Davenport, Home Ownership Mortgage,
Series 1994 (RB)
4.000%, 03/01/03 140 138
MICHIGAN--2.6%
Dearborn, School District Callable
05/01/03 @ 101.5 (GO) (MBIA)
4.850%, 05/01/05 $100 $ 91
St. Joseph, Hospital Finance Authority,
Mercy Memorial Medical Center (RB)
(AMBAC)
4.750%, 01/01/02 100 95
TOTAL MICHIGAN 186
MINNESOTA--8.5%
Minneapolis & St Paul, Housing &
Redevelopment Authority, Callable
11/15/03 @ 102 (RB) (AMBAC)
4.750%, 11/15/18 100 79
Robbinsdale, North Memorial
Medical Center, Series B Callable
05/15/03 @ 102 (RB) (AMBAC)
5.450%, 05/15/13 150 136
Saint Louis Park, Health Care
Facilities, Series A (RB) (AMBAC)
4.300%, 07/01/00 100 95
Southern Minnesota, Municipal
Power Authority, Callable 01/01/03
@ 102 (RB)
5.600%, 01/01/04 200 196
State Higher Education Facilities
Authority, Saint Catherines College,
Series 3-M2 (RB) (CL)
4.800%, 10/01/98 25 25
Wayzata, School District, Series B,
Callable 02/01/03 @ 100 (GO) (FGIC)
4.900%, 02/01/07 100 90
TOTAL MINNESOTA 621
MISSOURI--4.8%
Kansas City, Metropolitan Community
Colleges Building, Series B (RB) (FGIC)
4.050%, 07/01/98 40 39
Kansas City, School District (RB) (FGIC)
6.300%, 02/01/00 300 314
TOTAL MISSOURI 353
MONTANA--1.3%
State Health Facility Authority, Holy
Rosary Hospital Project, Series 1993
(RB) (MBIA)
4.400%, 07/01/01 100 95
NEBRASKA--0.3%
State Public Power District, Series A, Callable
01/01/03 @ 102 (RB)
5.200%, 01/01/07 $ 25 $ 23
NORTH DAKOTA--11.2%
Bismarck, Hospital Authority (RB) (AMBAC)
6.250%, 05/01/99 200 208
Fargo, Water Authority Callable
1-12/01/04 @ 100 (RB) (MBIA)
5.000%, 01/01/05 300 274
State Building Authority (RB) (AMBAC)
6.900%, 06/01/97 300 314
State Municipal Bond Bank, Capital
Financing Program, Series E (RB)
6.400%, 12/01/95 20 21
TOTAL NORTH DAKOTA 817
OKLAHOMA--2.9%
Oklahoma County, Home Finance
Authority Zero Coupon (RB), Escrowed
To Mandatory Put Date @ 56.915
0.000%, 03/01/06 790 214
OREGON--9.1%
Deschutes & Jefferson Counties, School
District (GO) (MBIA)
5.000%, 06/01/02 200 194
Multnomah County, School District (GO)
5.100%, 06/01/03 200 194
State (GO)
7.000%, 07/01/01 250 272
TOTAL OREGON 660
PENNSYLVANIA--3.9%
Commonwealth, Callable 05/01/04 @ 101.5
(GO)
5.300%, 05/01/06 300 284
SOUTH CAROLINA--1.4%
Beaufort County, (GO) (MBIA)
5.200%, 12/01/98 100 101
SOUTH DAKOTA--0.7%
State Building Authority, Series B
Callable 09/01/01 @ 100 (RB)
6.600%, 09/01/04 25 26
State Health And Education, Rapid City
Regional Hospital (RB) (MBIA)
5.300%, 09/01/00 25 25
TOTAL SOUTH DAKOTA 51
TEXAS--1.6%
Addison, Water & Sewer System (RB)
(AMBAC)
4.400%, 05/01/99 $100 $ 98
San Antonio, Electric And Gas
Improvement (RB)
6.900%, 02/01/96 15 15
TOTAL TEXAS 113
VIRGINIA--4.0%
Virginia Beach, Callable 11/01/04
@ 102 (GO) (STAID) *Non-income producing security
5.500%, 11/01/05 300 293
WASHINGTON--3.1%
Pierce County, School District #10
Callable 06/01/96 @ 100 (GO)
6.700%, 06/01/97 15 15
Seattle, (GO)
4.200%, 12/01/99 25 23
Snohomish County, School District
#15 EDMONDS (GO) (MBIA)
5.100%, 12/01/02 100 97
State Health Care Facilities, Dominican
Health Services (RB) (CL)
5.200%, 06/01/01 75 74
State Health Care Facilities, Tacoma
Multi-care Medical Center (RB) (FGIC)
7.150%, 08/15/98 15 16
TOTAL WASHINGTON 225
WASHINGTON, D.C.--2.9%
DISTRICT OF COLUMBIA, CALLABLE 6/01/98 @
101.5 (GO) (MBIA)
6.750%, 06/01/01 200 209
WEST VIRGINIA--0.2%
State Hospital Finance Authority, West
Virginia University Medical Center,
Callable 01/01/98 @ 102 (RB) (MBIA)
7.400%, 01/01/99 15 16
WISCONSIN--7.5%
Kenosha, Promissory Notes, Series A (GO)
(AMBAC)
4.900%, 04/01/99 75 74
Oak Creek, Water Works System, Callable
12/95 @ 100 (RB)
5.600%, 12/01/96 25 25
State Health & Education Authority,
Marquette University Project Callable
12/01/01 @ 100 (RB) (MBIA)
5.400%, 12/01/03 $ 60 $ 58
State Health And Educational Facilities,
Childrens Hospital, Series B (RB) (FGIC)
6.500%, 08/15/95 15 15
State, Prerefunded @ 100 (GO)
6.900%, 05/01/98 300 318
Wausau, Sewer System (RB)
5.300%, 01/01/02 60 59
TOTAL WISCONSIN 549
WYOMING--0.6%
State Community Development Authority,
Single Family Mortgage, Series A (RB)
(FHA)
6.400%, 06/01/95 15 15
Sweetwater, Pollution Control,
Pacific Power & Light Project,
Prerefunded 12/01/01 @ 100 (RB)
6.500%, 12/01/01 25 27
TOTAL WYOMING 42
TOTAL MUNICIPAL BONDS (Cost $6,912) 6,814
CASH EQUIVALENTS--4.7%
Federated Minnesota Municipal Cash Trust
3.304%, 10/07/94 68 68
Federated Tax Free Money Market
3.294%, 10/07/94 273 273
TOTAL CASH EQUIVALENTS (Cost $341) 341
TOTAL INVESTMENTS--98.1%
(Cost $7,253) 7,155
OTHER ASSETS AND LIABILITIES--1.9%
OTHER ASSETS AND LIABILITIES, NET 141
NET ASSETS
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
599,982 outstanding shares $6,269
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 109,654
outstanding shares 1,166
Accumulated net realized loss on investments (41)
Net unrealized depreciation of
investments (98)
TOTAL NET ASSETS:--100.0% $7,296
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $10.28
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS A $10.28
MAXIMUM SALES CHARGE OF 3.00%+ .32
OFFERING PRICE PER SHARE--RETAIL CLASS A $10.60
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.00%
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
GO--General Obligation
RB--Revenue Bond
AMBAC--American Municiapl Bond Assurance Company
CL--Connie Lee
CMI--California Municipal Insurers
FGIC--Financial Guaranty Insurance Corporation
FHA--Federal Housing Authority
MBIA--Municipal Bond Insurance Association
STAID--State Aid Withholding
COP--Certificates of Participation
LOC--Letter of Credit
The accompanying notes are an integral part of the financial statements.
COLORADO INTERMEDIATE TAX FREE FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--98.9%
COLORADO--98.9%
Adams County, School District
(GO) (FGIC)
6.000%, 12/01/00 $250 $261
Arapahoe County (COP) (AMBAC)
5.650%, 12/01/98 125 128
Arapahoe County, Cherry Creek School
District #5, Callable 12/15/95 @ 102 (GO)
5.600%, 12/15/97 350 357
Auraria, Higher Education Center,
Callable 04/01/03 @ 101 (RB) (FSA)
5.000%, 04/01/05 200 186
Aurora, Callable 12/01/04 @ 101 (COP)
6.000%, 12/01/06 350 343
Aurora, Single Family Mortgage,
Series 1993A, Callable 11/01/94 @ 100
(RB)
3.875%, 05/01/00 15 15
Boulder Valley, School District
#Re 2, Series A (GO)
5.500%, 10/15/99 75 76
Boulder, Callable 10/01/01 @ 101 (GO)
5.700%, 10/01/04 250 249
Boulder, Larimer, & Weld Counties,
Vrain Valley School District,
Prerefunded @ 101 (GO)
7.200%, 12/15/99 400 436
Boulder, Urban Renwal Tax Allocation
(RB) (MBIA)
5.700%, 03/01/00 150 153
Breckenridge, Excise Tax (RB) (MBIA)
5.100%, 12/01/00 400 397
Broomfield, Callable 11/01/96 @ 101 (GO)
7.600%, 11/01/03 350 371
Centennial Water & Sanitation, Series A,
Callable 12/01/96 @ 101 (GO) (SWB)
4.750%, 12/01/97 200 198
Colorado Springs, Colorado College
Project (RB)
4.100%, 06/01/99 30 29
Colorado Springs, Series A, Callable
11/15/01 @ 102 (RB)
6.625%, 11/15/04 40 43
Denver, City & County Airport, Series F
(RB) (BOM) (AMT) (A)
3.850%, 11/15/25 300 300
Denver, City & County School
District #1 (GO)
5.600%, 06/01/08 350 329
Denver, Major League Baseball Stadium
District, Revenue Refunding & Import
Sales Tax, Series A (RB) (FGIC)
5.800%, 10/01/98 $ 50 $ 52
Eagle, Garfield, & Routt Counties,
School District #50J Callable
12/01/04 @ 102 (GO) (FGIC)
6.125%, 12/01/09 (B) 390 389
El Paso County, School District #020 (GO)
6.100%, 12/01/99 150 152
Fort Collins, Callable 12/01/02 @ 101 (GO)
5.550%, 12/01/03 75 75
Fort Collins, Downtown Development
Authority (RB) (MBIA)
6.200%, 06/01/01 75 78
Fort Collins, Sales & Use Tax (RB) (FGIC)
4.900%, 06/01/01 100 98
Jefferson County, Callable 12/15/02
@ 101 (GO) (AMBAC)
5.900%, 12/15/04 350 357
Jefferson County, Industrial
Development (RB)
6.625%, 09/01/01 65 68
Jefferson County, Metropolitain Y.M.C.A.,
Callable 08/01/04 @ 100 (RB)
7.500%, 08/01/08 200 197
La Plata County, School Districts
#9 and Durango, Callable 11/01/02
@ 101 (GO) (FGIC)
6.200%, 11/01/05 400 412
Larimer County (GO)
5.400%, 12/15/04 125 121
Larimer, Weld, & Boulder Counties,
School District #R-2J Thompson,
Callable 12/15/04 @ 100 (GO)
5.900%, 12/15/06 350 347
Longmont (GO)
5.250%, 11/15/01 75 75
Platte River Power Authority, Series BB (RB)
5.500%, 06/01/02 150 150
Poudre Valley, Hospital District (RB)
4.600%, 11/15/99 50 48
Pueblo, Urban Renewal Authority,
Callable 12/01/03 @ 101 (RB)
5.800%, 12/01/09 150 146
State Board of Agriculture, Fort
Lewis College (RB) (FGIC)
6.000%, 10/01/02 200 207
State Colleges Board, Mesa State College,
Series B Enterprise, Callable 05/15/04
@ 101 (RB) (MBIA)
5.500%, 05/15/09 $200 $ 187
State Housing Finance Authority (RB)
5.000%, 06/01/04 100 94
State Housing Finance Authority,
Multifamily Housing, Series A (RB) (FHA)
5.125%, 10/01/03 100 95
State Housing Finance Authority,
Single Family Mortgage, Series C-2
(RB) (FHA) (AMT)
6.850%, 08/01/22 90 90
State Regional Transit District,
Sales Tax (RB) (FGIC)
4.875%, 11/01/01 75 73
State Student Loan Obligation
Authority, Series A (RB)
6.250%, 06/01/96 125 129
State Water Resource & Power
Development Authority, Callable
09/01/02 @ 101 (RB) (FSA)
5.900%, 09/01/03 75 77
State Water Resources & Power
Development Authority, Clean Water,
Callable 09/01/02 @ 102 (RB)
5.800%, 09/01/06 150 150
Thornton, Callable 12/01/02
@ 101 (GO) (FGIC)
5.650%, 12/01/03 150 151
TOTAL COLORADO 7,889
TOTAL MUNICIPAL BONDS
(Cost $7,921) 7,889
CASH EQUIVALENTS--3.2%
Federated Tax Free Money Market (A)
3.294%, 10/07/94 $252 $ 252
TOTAL CASH EQUIVALENTS (Cost $252) 252
TOTAL INVESTMENTS--102.1%
(Cost $8,173) $8,141
(A) Variable Rate with Demand Features--the rate reported in the Schedule of
Investments is the rate in effect as of September 30, 1994
(B) When issued security (Cost $389,009)
AMT--Alternative Minimum Tax
COP--Certificates of Participation
GO--General Obligation
RB--Revenue Bond
AMBAC--American Municipal Bond Assurance Company
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Authority
FSA--Financial Security Assurance
SWB--Swiss Bank
MBIA--Municipal Bond Insurance Company
BOM--Bank of Montreal
The accompanying notes are an integral part of the financial statements.
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
DESCRIPTION PAR (000) VALUE (000)
MUNICIPAL BONDS--95.3%
MINNESOTA--95.3%
Anoka County Solid Waste Disposal
(RB) (CFC) (AMT)
6.000%, 12/01/98 $500 $507
Anoka-Hennepin, Callable 02/01/03 @
100 (GO) (FGIC)
4.875%, 02/01/07 500 448
Becker, Tax Increment, Series D,
Callable 08/01/04 @ 100 (GO) (MBIA)
6.000%, 08/01/07 500 493
Bloomington, Mall of America
Project, Series A, Callable 02/01/04
@ 100 (RB) (FSA)
5.450%, 02/01/09 800 778
Burnsville Apartment Projects, Series A,
Putable 12/01/98 (RB) (PMLIC)
5.000%, 12/01/08 500 496
Coon Rapids, Single Family Mortgage,
Callable 09/01/04 @ 102 (RB)
5.900%, 09/01/06 500 492
Dakota County, Housing & Redevelopment
Authority, Single Family Mortgage, Callable
09/01/98 @ 103 (RB) (GNMA, FHA/VA
Credit Support)
7.250%, 03/01/06 900 900
Dakota County, Single Family
Mortgage, Series 1994A, Callable
04/01/04 @ 102 (RB) (FNMA) (AMT)
6.250%, 10/01/04 500 500
Dakota, Washington & Stearns
Counties, Single Family Mortgage,
Callable 03/01/04 @ 102 (RB)
(FNMA) (AMT)
6.000%, 09/01/04 650 645
Duluth, Economic Development
Authority, Health Care Facilities,
Callable 11/01/02 @ 102
(RB) (AMBAC)
6.100%, 11/01/04 500 512
Mahtomedi, Independent School
District (GO) (FGIC)
4.250%, 02/01/02 100 92
Mankato, Independent School
District, Series A, Callable
02/01/04 @ 100 (GO) (CGIC)
5.000%, 02/01/05 800 749
Minneapolis & St. Paul, Housing
Finance Board, Single Family
Mortgage, Series A (RB) (AMT)
(GNMA, FHA/VA Credit Support)
7.875%, 12/01/12 $ 50 $ 50
Minneapolis & St.Paul Metropolitan
Airports, Callable 01/01/99 @ 102
(RB) (AMT)
7.800%, 01/01/11 500 543
Minneapolis, Community Development
Agency, (RB) (MBIA)
7.000%, 03/01/01 800 871
Minneapolis, Convention Center,
Prerefunded @ 102, (RB) (AMBAC)
7.400%, 04/01/96 250 265
Minneapolis, Health Care Facilities,
Callable 11/15/02 @ 102 (RB) (MBIA)
5.100%, 11/15/05 700 655
Minneapolis, Hennepin Avenue,
Series C (GO)
6.200%, 03/01/02 750 788
Northern Municipal Power Agency,
Minnesota Electric, Series A, Callable
01/01/03 @ 102 (RB) (AMBAC)
5.700%, 01/01/05 800 801
Plymouth Health Facilities,
Callable 06/01/04 @ 102 (RB) (CGIC)
6.200%, 06/01/11 800 798
Robbinsdale, North Memorial
Medical Center Project, Escrowed
To Maturity, (RB) (AMBAC)
6.750%, 01/01/97 400 418
Rochester, St. Mary's Hospital
Project, Escrowed To Maturity (RB)
5.750%, 10/01/07 500 489
Rosemount, Independent School
District, Series B, (GO) (FGIC)
5.600%, 02/01/98 500 509
Saint Louis Park, Health Care
Facilities, Series A (RB) (AMBAC)
4.300%, 07/01/00 100 95
Saint Louis Park, Methodist
Hospital Facilities, Series C,
Pre-Refunded @ 102 (RB) (AMBAC)
7.150%, 07/01/00 500 555
St. Paul Sewer Systems, Callable
06/01/03 @ 100 (RB) (AMBAC)
5.350%, 12/01/04 800 785
St. Paul, Housing & Development
Authority, Downtown & Seventh Place
Project (RB) (AMBAC)
4.850%, 09/01/01 500 486
St. Paul, Housing & Redevelopment
Authority, Civic Center Project (RB)
4.550%, 11/01/00 $100 $ 94
State Housing Finance Agency, Single
Family Mortgage, Series D, Callable
01/01/04 @ 102 (RB) (AMBAC)
4.800%, 07/01/04 800 757
State Tax-Exempt Mortgage
Trust, Series A (Guarantor:
Northwestern National) (RB) (A)
4.096%, 02/01/96 251 251
State Tax-Exempt Mortgage
Trust, Series C (Guarantor:
Northwestern National) (RB) (A)
5.306%, 01/15/95 993 984
Stearns County, Housing &
Redevelopment Authority, Callable
02/01/99 @ 102, (RB) (AMBAC)
6.750%, 02/01/04 1,000 1,054
Stillwater, Independent School
District, Callable 02/01/02 @ 100
(RB) (FGIC)
5.200%, 02/01/03 800 777
Washington County, Housing
& Redevelopment Authority,
Pre-Refunded 02/01/02 @ 100, (RB)
6.800%, 02/01/02 800 867
Wayzata Independent School District,
Series B, Callable 02/01/03 @ 100
(GO) (FGIC)
4.900%, 02/01/07 800 722
Wright County Solid Waste, Series C,
Callable 12/01/99
@ 100 (RB) (AMT) (CGIC)
7.000%, 12/01/05 500 543
TOTAL MINNESOTA 20,769
TOTAL MUNICIPAL BONDS
(Cost $21,021) 20,769
CASH EQUIVALENTS--3.5%
Federated Minnesota Municipal Cash
Trust (A)
3.304%, 10/07/94 482 482
Federated Tax Free Money Market (A)
3.294%, 10/07/94 276 276
TOTAL CASH EQUIVALENTS (Cost $758) 758
TOTAL INVESTMENTS--98.8%
(Cost $21,779) 21,527
OTHER ASSETS AND LIABILITIES--1.2%
OTHER ASSETS AND LIABILITIES, NET 253
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 2,114,099 outstanding shares $20,524
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
157,379 outstanding shares 1,520
Accumulated net realized loss on
investments (12)
Net unrealized depreciation
of investments (252)
TOTAL NET ASSETS:--100.0% $21,780
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 9.59
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.58
MAXIMUM SALES CHARGE OF 3.00%+ .30
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 9.88
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.00%.
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994. The date shown is the longer
of the reset or demand date.
AMT--Alternative Minimum Tax
GO--General Obligation
RB--Revenue Bond
AMBAC--American Municipal Bond Assurance Company
CFC--National Rural Utilities Cooperative Finance Corporation
CGIC--Capital Guaranty Insurance Company
FGIC--Financial Guaranty Insurance Company
FHA/VA--Federal Housing Authority/Veterans Administration
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Insurance Company
PMLIC--Phoenix Mutual Life Insurance Company
The accompanying notes are an integral part of the financial statements.
ASSET ALLOCATION FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--60.3%
AEROSPACE & DEFENSE--0.5%
Lockheed 600 $ 42
Loral 700 28
Martin Marietta 800 36
Raytheon 1,300 82
Rockwell International 2,100 72
TOTAL AEROSPACE & DEFENSE 260
AGRICULTURE--0.1%
Pioneer Hi-Bred International 900 28
AIR TRANSPORTATION--0.2%
AMR* 600 31
Delta Air Lines 300 13
Federal Express* 600 37
TOTAL AIR TRANSPORTATION 81
AIRCRAFT--0.9%
AlliedSignal 2,700 92
Boeing 2,800 121
General Dynamics 600 26
McDonnell Douglas 400 46
Northrop 700 32
Textron 700 36
United Technologies 1,100 69
TOTAL AIRCRAFT 422
APPAREL/TEXTILES--0.1%
Liz Claiborne 700 16
V.F. 600 30
TOTAL APPAREL/TEXTILES 46
AUTOMOTIVE--1.7%
Chrysler 2,900 130
Dana 1,000 28
Eaton 900 43
Ford Motor 8,300 230
General Motors 6,800 319
Paccar 390 18
TRW 500 36
TOTAL AUTOMOTIVE 804
BANKS--3.6%
Banc One 3,552 106
Bank Of Boston 900 24
BankAmerica 3,100 134
Bankers Trust New York 700 47
Barnett Banks 1,100 49
Boatmens Bancshares 900 28
Chase Manhattan 1,800 $ 62
Chemical Banking 2,100 74
Citicorp 3,200 135
Corestates Financial 1,300 35
First Chicago 900 41
First Fidelity Bancorp 800 34
First Interstate Bancorp 700 57
First Union 1,700 74
Fleet Financial Group 1,100 41
Golden West Financial 500 20
Great Western Financial 1,100 21
H.F. Ahmanson 1,000 21
J.P. Morgan 1,600 97
Keycorp 2,400 73
MBNA 1,400 32
Mellon Bank 600 34
NationsBank 2,200 108
NBD Bancorp 1,700 49
Norwest 2,600 64
PNC Bank 2,300 60
Shawmut National 900 19
Suntrust Banks 1,200 59
U.S. Bancorp 900 23
Wachovia 1,600 52
Wells Fargo 500 73
TOTAL BANKS 1,746
BEAUTY PRODUCTS--1.1%
Avon Products 800 48
Colgate-Palmolive 1,200 70
Ecolab 1,200 26
International Flavors &
Fragrances 1,200 50
Procter & Gamble 5,700 339
TOTAL BEAUTY PRODUCTS 533
BROADCASTING, NEWSPAPERS & ADVERTISING--0.7%
Capital Cities ABC 1,500 123
CBS 145 47
Comcast, Class A 2,400 37
Interpublic Group 800 26
Tele-Communications, Class A* 4,600 102
TOTAL BROADCASTING, NEWSPAPERS
& ADVERTISING 335
BUILDING & CONSTRUCTION--0.2%
Fluor 700 35
Halliburton 1,200 38
TOTAL BUILDING & CONSTRUCTION 73
CHEMICALS--2.5%
Air Products & Chemical 1,200 $ 56
American Cyanamid 1,000 100
Dow Chemical 2,300 180
E.I. Dupont De Nemours 5,600 325
Eastman Chemical 800 44
FMC* 300 19
Great Lakes Chemical 800 47
Hercules 400 41
Monsanto 1,000 80
Morton International 1,200 33
Nalco Chemical 600 20
PPG Industries 2,000 79
Praxair 1,200 29
Rohm & Haas 700 40
Union Carbide 1,500 51
W.R. Grace 900 37
TOTAL CHEMICALS 1,181
COMMUNICATIONS EQUIPMENT--0.8%
DSC Communications* 900 26
Harris 600 29
Motorola 4,600 243
Northern Telecom 2,400 83
TOTAL COMMUNICATIONS EQUIPMENT 381
COMPUTERS & SERVICES--1.6%
Apple Computer 1,100 37
Compaq Computer* 2,100 69
Digital Equipment* 1,400 37
Hewlett Packard 2,100 183
IBM 4,800 334
Pitney Bowes 1,300 46
Tandy 600 26
Unisys* 2,400 26
TOTAL COMPUTERS & SERVICES 758
CONTAINERS & PACKAGING--0.2%
Crown Cork & Seal* 1,000 39
Newell 1,800 40
TOTAL CONTAINERS & PACKAGING 79
DOLLS AND STUFFED TOYS--0.1%
Mattel 1,500 41
DRUGS--4.1%
Abbott Laboratories 6,800 213
Alza, Class A* 1,200 25
American Home Products 2,600 156
Amgen* 1,100 59
Bristol-Myers Squibb 4,200 241
Eli Lilly 2,400 $ 139
Johnson & Johnson 5,300 274
Mallinckrodt Group 700 23
Merck 10,400 368
Pfizer 2,700 187
Schering Plough 1,600 114
Upjohn 1,800 61
Warner Lambert 1,100 88
TOTAL DRUGS 1,948
ELECTRICAL SERVICES--2.6%
American Electric Power 1,700 53
Baltimore Gas & Electric 1,600 37
Carolina Power & Light 1,800 47
Central & South West 2,200 49
Consolidated Edison New York 2,300 57
Detroit Edison 1,700 43
Dominion Resources Of Virginia 1,700 63
Duke Power 1,700 66
Entergy 2,100 49
FPL Group 1,800 59
Houston Industries 1,100 39
Niagara Mohawk Power 1,400 19
Northern States Power 700 30
Ohio Edison 1,700 32
Pacific Gas & Electric 4,100 93
Pacificorp 2,400 41
Peco Energy 2,200 56
Public Service Enterprise Group 2,400 63
SCEcorp 4,600 60
Southern 6,100 113
Texas Utilities 2,000 65
Unicom 2,500 56
Union Electric 1,200 42
TOTAL ELECTRICAL SERVICES 1,232
ENTERTAINMENT--0.6%
Blockbuster Entertainment 2,500 72
Promus* 1,150 39
Walt Disney 4,500 174
TOTAL ENTERTAINMENT 285
ENVIRONMENTAL SERVICES--0.4%
Browning Ferris Industries 2,000 64
WMX Technologies 4,000 115
TOTAL ENVIRONMENTAL SERVICES 179
FINANCIAL SERVICES--1.3%
American Express 4,100 125
Beneficial 400 16
Dean Witter Discover 1,446 54
Federal Home Loan Mortgage 1,700 $ 91
Federal National Mortgage
Association 2,300 181
H & R Block 900 41
Household International 900 32
Merrill Lynch 1,700 59
Transamerica 728 37
TOTAL FINANCIAL SERVICES 636
FOOD, BEVERAGE & TOBACCO--5.3%
American Brands 1,700 62
Anheuser Busch 2,200 112
Archer Daniels Midland 3,291 86
Brown Forman, Class B 600 16
Campbell Soup 2,100 83
Coca Cola 10,700 518
ConAgra 2,300 72
CPC International 1,500 76
General Mills 1,300 75
Heinz (H.J.) 2,100 77
Hershey Foods 800 36
Kellogg 1,900 109
Pepsico 6,600 219
Pet 900 18
Philip Morris 7,300 446
Quaker Oats 700 54
Ralston Purina Group 1,000 41
Sara Lee 4,000 90
Seagram 3,100 94
Unilever N.V.-ADR 1,400 159
UST 1,700 49
Wrigley (WM) Jr 1,300 53
TOTAL FOOD, BEVERAGE & TOBACCO 2,545
GAMES, TOYS AND CHILDREN'S VEHICLES--0.1%
Hasbro 900 27
GAS/NATURAL GAS--0.5%
Coastal 1,200 33
Consolidated Natural Gas 1,100 43
Enron 2,500 75
Pacific Enterprises 1,200 26
Panhandle Eastern 1,100 26
Sonat 1,000 31
Williams Companies 1,000 30
TOTAL GAS/NATURAL GAS 264
GLASS PRODUCTS--0.1%
Corning 2,000 65
HOTELS & LODGING--0.1%
Hilton Hotels 500 30
HOUSEHOLD FURNITURE & FIXTURES--0.1%
Masco 1,300 $ 31
HOUSEHOLD PRODUCTS--0.6%
Clorox 600 31
Gillette 1,800 128
Maytag 1,000 16
National Service Industries 200 5
Sherwin Williams 800 25
Snap-On Tools 300 11
Stanley Works 400 16
Whirlpool 800 41
TOTAL HOUSEHOLD PRODUCTS 273
INSURANCE--2.2%
Aetna Life & Casualty 900 42
American General 2,100 57
American International Group 2,650 235
Chubb 900 64
Cigna 800 49
General Re 700 74
Jefferson-Pilot 400 21
Lincoln National 1,000 37
Marsh & Mclennan 600 47
Providian 1,000 32
Safeco 600 31
St. Paul Companies 1,000 41
Torchmark 600 26
Travelers 3,035 100
U.S. Healthcare 1,600 75
United Healthcare 1,600 85
UNUM 700 32
TOTAL INSURANCE 1,048
LUMBER & WOOD PRODUCTS--0.1%
Louisiana Pacific 1,200 40
MACHINERY--2.8%
Baker Hughes 1,500 28
Black & Decker 700 15
Brunswick 1,400 28
Caterpillar 1,600 87
Cummins Engine 200 8
Deere 700 48
Dover 600 34
Dresser Industries 1,500 30
Emerson Electric 1,900 113
General Electric 14,700 708
Ingersoll Rand 1,200 42
McDermott International 1,000 26
Pall 1,000 17
Parker Hannifin 400 $ 16
Tenneco 1,500 66
Texas Instruments 900 62
Tyco International 400 19
TOTAL MACHINERY 1,347
MEASURING DEVICES--0.1%
Honeywell 1,100 38
Johnson Controls 300 15
TOTAL MEASURING DEVICES 53
MEDICAL PRODUCTS & SERVICES--1.0%
Bard (C.R.) 900 23
Bausch & Lomb 600 23
Baxter International 2,300 64
Becton Dickinson 800 39
Biomet* 1,800 22
Medtronic 1,200 63
St. Jude Medical 800 29
U.S. Surgical 700 19
Beverly Enterprises* 1,700 26
Columbia HCA Healthcare 3,337 145
National Medical Enterprises* 1,800 31
TOTAL MEDICAL PRODUCTS & SERVICES 484
METALS & MINING--0.1%
Cyprus Amax Minerals 850 27
MISCELLANEOUS BUSINESS SERVICES--1.8%
Automatic Data Processing 1,400 79
Cisco Systems* 2,500 68
Computer Associates International 1,600 71
Computer Sciences* 500 22
Lotus Development* 400 15
Microsoft* 7,700 432
Novell* 3,700 55
Oracle Systems* 2,400 103
Sun Microsystems* 900 26
TOTAL MISCELLANEOUS BUSINESS SERVICES 871
MISCELLANEOUS CONSUMER SERVICES--0.0%
Service International 600 15
MULTI-INDUSTRY--0.6%
Dial 800 17
ITT 1,000 83
Minnesota Mining & Manufacturing 3,500 192
TOTAL MULTI-INDUSTRY 292
OIL - DOMESTIC--1.1%
Ashland Oil 600 21
Atlantic Richfield 1,300 $ 131
Kerr-McGee 400 19
Louisiana Land & Exploration 500 22
Pennzoil 400 19
Phillips Petroleum 2,200 75
Schlumberger 2,000 109
Sun 1,100 32
Unocal 2,400 68
USX-marathon Group 2,600 46
TOTAL OIL-DOMESTIC 542
OIL - INTERNATIONAL--4.1%
Amerada Hess 1,000 47
Amoco 4,100 243
Chevron 5,400 225
Exxon 10,700 616
Mobil 3,300 261
Royal Dutch Petroleum--ADR 4,400 472
Texaco 2,100 126
TOTAL OIL-INTERNATIONAL 1,990
PAPER & PAPER PRODUCTS--1.1%
Champion International 1,000 39
Georgia-Pacific 700 54
International Paper 1,000 79
Kimberly Clark 1,300 76
Mead 600 31
Scott Paper 800 49
Stone Container* 700 14
Temple Inland 500 28
Union Camp 800 39
Westvaco 600 23
Weyerhaeuser 1,700 76
TOTAL PAPER & PAPER PRODUCTS 508
PETROLEUM & FUEL PRODUCTS--0.3%
Burlington Resources 1,300 49
Helmerich & Payne 900 25
Occidental Petroleum 2,500 52
Western Atlas* 700 31
TOTAL PETROLEUM & FUEL PRODUCTS 157
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--0.5%
Eastman Kodak 2,700 139
Polaroid 300 11
Xerox 900 96
TOTAL PHOTOGRAPHIC
EQUIPMENT & SUPPLIES 246
PRECIOUS METALS--0.4%
American Barrick Resources* 2,800 $ 75
Homestake Mining 1,400 30
Newmont Mining 873 39
Placer Dome 2,600 65
TOTAL PRECIOUS METALS 209
PRINTING & PUBLISHING--1.1%
American Greetings, Class A 600 17
Deluxe 1,000 29
Dow Jones 1,100 33
Gannett 1,500 72
John H. Harland 900 19
Knight-Ridder 600 30
Mcgraw Hill 500 37
Moore 800 15
New York Times, Class A 1,400 31
R.R. Donnelley & Sons 1,300 39
Time Warner 3,100 108
Times Mirror, Class A 1,300 40
Tribune 800 43
TOTAL PRINTING & PUBLISHING 513
PROFESSIONAL SERVICES--0.2%
Dun & Bradstreet 1,400 81
RAILROADS--0.7%
Burlington Northern 700 35
Consolidated Rail 900 45
CSX 900 62
Norfolk Southern 1,300 81
Santa Fe Pacific 2,000 45
Union Pacific 1,700 91
TOTAL RAILROADS 359
REPAIR SERVICES--0.0%
Ryder System 500 13
RETAIL--4.0%
Albertson's 2,500 73
American Stores 1,600 40
Circuit City Stores 900 23
Dayton Hudson 700 54
Dillard Department Stores 1,100 29
Gap 1,200 39
Harcourt General 800 28
Home Depot 3,733 157
J.C. Penney 2,000 103
Kmart 4,100 73
Kroger* 900 24
Limited 3,600 71
Lowe's Companies 1,600 $ 62
Marriott International 1,200 35
May Department Stores 2,100 83
McDonalds 5,900 155
Melville 1,100 39
Nordstrom 700 28
Price/Costco* 1,704 27
Sears Roebuck 2,900 139
Toys R Us* 2,400 86
Wal-Mart Stores 19,100 446
Walgreen 1,300 49
Wendy's International 700 10
Winn Dixie Stores 800 40
Woolworth 1,200 21
TOTAL RETAIL 1,934
RUBBER & PLASTIC--0.5%
Armstrong World Industries 400 17
Cooper Tire & Rubber 900 21
Goodyear Tire & Rubber 1,300 43
Illinois Tool Works 900 38
Nike, Class B 800 48
Premark International 600 25
Reebok International 1,000 36
Rubbermaid 1,300 35
TOTAL RUBBER & PLASTIC 263
SEMI-CONDUCTORS/INSTRUMENTS--0.7%
Advanced Micro Devices* 900 27
AMP 1,000 77
Intel 3,500 215
National Semiconductor* 1,000 16
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 335
SPECIALTY MACHINERY--0.2%
Cooper Industries 1,000 40
Westinghouse Electric 2,900 38
TOTAL SPECIALTY MACHINERY 78
STEEL & STEEL WORKS--0.8%
Alcan Aluminium* 1,900 50
Aluminum Company Of America 800 68
Bethlehem Steel* 1,400 29
Englehard 800 22
Inco 1,200 36
Nucor 700 49
Phelps Dodge 800 50
Reynolds Metals 600 34
USX-U.S. Steel Group 600 25
Worthington Industries 1,350 29
TOTAL STEEL & STEEL WORKS 392
TELEPHONES & TELECOMMUNICATIONS--5.2%
Airtouch Communications* 4,100 $ 117
Ameritech 4,500 181
AT&T 13,400 722
Bell Atlantic 3,600 191
BellSouth 4,100 229
GTE 7,900 240
MCI Communications 4,500 115
NYNEX 3,400 131
Pacific Telesis Group 3,500 108
Southwestern Bell 5,000 213
Sprint 2,800 107
U.S. West 4,100 159
TOTAL TELEPHONES
& TELECOMMUNICATIONS 2,513
TRUCKING--0.1%
Pittston Services Group 300 9
Roadway Services 300 17
Yellow 1,100 20
TOTAL TRUCKING 46
WHOLESALE--0.5%
Alco Standard 500 31
Genuine Parts 1,400 48
Grainger (W.W.) 600 36
McKesson 400 41
Salomon 900 36
Supervalu 700 18
Sysco 1,900 48
TOTAL WHOLESALE 258
TOTAL COMMON STOCKS (Cost $27,381) 28,897
U.S. TREASURY OBLIGATIONS--21.6%
U.S. Treasury Notes
5.875%, 03/31/99 $2,760 2,619
6.500%, 04/30/99 1,540 1,496
5.750%, 08/15/03 7,095 6,254
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,858) 10,369
MASTER NOTES--17.0%
Associates Corporation of North
America (A)
4.813%, 10/04/94 2,030 2,030
Barclays (A)
4.779%, 10/03/94 2,125 2,124
Goldman Sachs (A)
4.950%, 10/04/94 2,050 2,050
Heller Financial (A)
4.935%, 10/04/94 1,946 1,946
TOTAL MASTER NOTES
(Cost $8,150) 8,150
REPURCHASE AGREEMENTS--2.0%
Merrill Lynch 4.562%, dated 09/30/94,
matures 10/03/94, repurchase price
$958,435 (collateralized by a U.S.
Treasury Note, total par value
$973,913 interest rate 4.25%, matures
01/31/95, market value $977,424) $ 958
TOTAL REPURCHASE AGREEMENTS
(Cost $958) 958
TOTAL INVESTMENTS--100.9%
(Cost $47,347) 48,374
OTHER ASSETS AND LIABILITIES--(0.9%)
OTHER ASSETS AND LIABILITIES, NET (429)
NET ASSETS
Portfolio shares--Institutional Class ($.0001 par
value--2 billion authorized) based on 4,548,221
outstanding shares 45,298
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 68,088
outstanding shares 680
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 1,045
outstanding shares 11
UNDISTRIBUTED NET INVESTMENT INCOME 10
ACCUMULATED NET REALIZED GAIN ON INVESTMENTS 919
NET UNREALIZED APPRECIATION OF INVESTMENTS 1,027
TOTAL NET ASSETS--100.0% $47,945
NET ASSET VALUE OFFERING PRICE AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 10.38
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.39
MAXIMUM SALES CHARGE OF 4.50% (1) .49
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.88
NET ASSET VALUE AND OFFERING
PRICE PER SHARE--RETAIL CLASS B (2) $ 10.37
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
ADR--American Depository Receipt
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
BALANCED FUND
DESCRIPTION PAR (000)/SHARES VALUE (000)
COMMON STOCKS--54.6%
APPAREL/TEXTILES--1.1%
Liz Claiborne 69,000 $1,570
AUTOMOTIVE--1.8%
Automotive Industries* 31,600 766
General Motors 36,600 1,716
TOTAL AUTOMOTIVE 2,482
BANKS--2.2%
Banc One 36,300 1,084
BayBanks 15,500 853
Chemical Banking 33,000 1,155
TOTAL BANKS 3,092
BUILDING & CONSTRUCTION SUPPLIES--0.4%
Instrument Systems* 65,300 514
CHEMICALS--0.6%
Ferro 33,500 825
COMPUTERS & SERVICES--2.8%
Hewlett-Packard 23,500 2,053
IBM 26,600 1,849
TOTAL COMPUTERS & SERVICES 3,902
DIVERSIFIED--1.0%
International Paper 17,900 1,405
DRUGS--3.1%
American Home Products 32,800 1,968
Bristol-Myers Squibb 22,400 1,285
Upjohn 31,400 1,072
TOTAL DRUGS 4,325
ELECTRICAL UTILITIES--0.5%
Hawaiian Electric Industries 20,700 655
FOOD, BEVERAGE & TOBACCO--3.2%
ConAgra 69,900 2,202
Quaker Oats 11,400 872
Sara Lee 59,900 1,348
TOTAL FOOD, BEVERAGE & TOBACCO 4,422
HOME APPLIANCES--0.8%
Whirlpool 21,400 1,099
INSURANCE--4.0%
AMBAC 40,100 1,484
General Re 15,300 1,620
Providian 50,300 1,584
Western National 63,500 $ 857
TOTAL INSURANCE 5,545
MACHINERY--4.4%
Case Equipment 29,700 579
Caterpillar 20,200 1,093
Deere 21,300 1,462
General Electric 51,400 2,474
Ingersoll-Rand 14,500 513
TOTAL MACHINERY 6,121
MEDICAL--1.2%
Bausch & Lomb 26,800 1,045
Becton, Dickinson 14,500 700
TOTAL MEDICAL 1,745
METALS & MINING--2.5%
Aluminum Company of America 27,100 2,297
Inco 41,300 1,244
TOTAL METALS & MINING 3,541
MULTI-INDUSTRY--3.0%
Dial 35,700 745
ITT 23,300 1,943
Minnesota Mining &
Manufacturing 28,400 1,569
TOTAL MULTI-INDUSTRY 4,257
OIL - INTERNATIONAL--5.7%
Exxon 28,800 1,660
Mobil 20,900 1,654
Royal Dutch Petroleum (ADR) 23,500 2,523
Texaco 35,400 2,124
TOTAL OIL-INTERNATIONAL 7,961
PAPER & PAPER PRODUCTS--3.4%
Bemis 61,400 1,519
Bowater 31,500 917
James River 35,900 871
Scott Paper 22,900 1,400
TOTAL PAPER & PAPER PRODUCTS 4,707
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--2.9%
Eastman Kodak 43,500 2,251
Xerox 16,200 1,729
TOTAL PHOTOGRAPHIC EQUIPMENT & SUPPLIES 3,980
RAILROADS--2.0%
CSX 19,700 1,349
Norfolk Southern 11,500 716
Southern Pacific Rail* 40,700 763
TOTAL RAILROADS 2,828
RETAIL--1.2%
Dayton Hudson 21,200 $ 1,622
RUBBER & PLASTIC--1.9%
Premark International 39,800 1,681
Reebok International 26,000 930
TOTAL RUBBER & PLASTIC 2,611
SEMICONDUCTORS & RELATED DEVICES--2.1%
AMP 12,800 990
Texas Instruments 28,100 1,922
TOTAL SEMICONDUCTORS & RELATED DEVICES 2,912
SPECIALTY MACHINERY--0.7%
York International 23,800 991
TELEPHONES & TELECOMMUNICATION--1.6%
Century Telephone
Enterprises 28,100 811
GTE 47,400 1,440
TOTAL TELEPHONES & TELECOMMUNICATION 2,251
WHOLESALE--0.5%
(W.W.) Grainger 11,100 658
TOTAL COMMON STOCKS (Cost $71,568) 76,021
REAL ESTATE INVESTMENT TRUSTS--2.2%
Debartolo Realty 84,900 1,231
Duke Realty Investments 33,900 848
Simon Property Group 39,900 1,022
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $3,013) 3,101
U.S. TREASURY OBLIGATIONS--25.7%
U.S. Treasury Bond
7.250%, 08/15/22 $11,650 10,744
U.S. Treasury Notes
4.625%, 02/15/96 10,650 10,419
5.750%, 10/31/97 5,740 5,549
5.125%, 11/30/98 4,485 4,155
6.375%, 01/15/00 1,000 960
6.250%, 02/15/03 4,135 3,798
U.S. Treasury STRIP
02/15/99 265 194
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $37,594) 35,819
CORPORATE OBLIGATIONS--5.5%
Bear Stearns
9.125%, 04/15/98 770 803
8.750%, 03/15/04 1,150 1,160
Farmers Group
8.250%, 07/15/96 1,045 1,066
General Foods
6.000%, 06/15/01 $ 860 $ 770
General Motors Acceptance
7.650%, 01/16/98 2,375 2,374
Torchmark
7.875%, 05/15/23 1,700 1,509
TOTAL CORPORATE OBLIGATIONS
(Cost $8,201) 7,682
U.S. GOVERNMENT AGENCY OBLIGATIONS--4.5%
FHLMC
6.250%, 12/15/06 1,725 1,545
6.000%, 11/15/08 2,700 2,293
FNMA
5.450%, 02/20/22 2,700 2,406
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,988) 6,244
ASSET BACKED SECURITIES--1.6%
BW Home Equity Trust Pool 1990-1 A
9.250%, 09/15/05 62 62
Household Finance 1993-2 A3
4.650%, 12/20/08 2,244 2,134
TOTAL ASSET BACKED SECURITIES
(Cost $2,299) 2,196
OTHER MORTGAGE BACKED OBLIGATIONS--1.4%
Drexel Burnham Lambert CMO Trust S 2
9.000%, 08/01/18 560 572
Residential Funding 1992-36 A2
5.700%, 11/25/07 803 776
Resolution Trust 1991-M6 B2 (B)
7.000%, 06/25/21 614 607
TOTAL OTHER MORTGAGE BACKED OBLIGATIONS
(Cost $1,970) 1,955
MASTER NOTES--4.8%
Associates Corporation of North America (A)
4.813%, 10/04/94 1,162 1,162
Barclays (A)
4.779%, 10/03/94
Goldman Sachs (A)
4.950%, 10/04/94 2,704 2,704
Heller Financial (A)
4.935%, 10/04/94 2,796 2,796
TOTAL MASTER NOTES (Cost $6,662) 6,662
TOTAL INVESTMENTS--100.3%
(Cost $138,295) 139,680
OTHER ASSETS AND LIABILITIES--(0.3%)
OTHER ASSETS AND LIABILITIES, NET (391)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) 11,891,257
outstanding shares $122,374
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 1,303,415
outstanding shares 13,523
Portfolio
shares--Retail Class B
($.0001 par value--2
billion authorized)
based on 25,684
outstanding shares 274
Undistributed net
investment income 24
Accumulated net
realized gain on
investments 1,709
Net unrealized
appreciation of
investments 1,385
TOTAL NET
ASSETS:--100.0% $139,289
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 10.54
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.54
MAXIMUM SALES CHARGE OF
4.50% (1) .50
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 11.04
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 10.53
* Non-income producing security
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994. The date shown is the longer
of the reset or demand date.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under the guidelines established by the Board of Directors.
ADR--American Depository Receipt
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
EQUITY INDEX FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--99.4%
AEROSPACE & DEFENSE--0.8%
E Systems 1,700 $ 70
Loral 3,900 154
Martin Marietta 4,200 187
Raytheon 6,300 404
Rockwell International 10,200 349
TRW 3,100 225
TOTAL AEROSPACE & DEFENSE 1,389
AGRICULTURE--0.1%
Pioneer Hi-Bred
International 3,800 120
AIR TRANSPORTATION--0.4%
AMR* 3,500 180
Delta Air Lines 2,100 94
Federal Express* 2,300 142
Southwest Airlines 7,000 158
US Air Group* 5,100 24
TOTAL AIR TRANSPORTATION 598
AIRCRAFT--1.3%
Boeing 17,500 753
General Dynamics 2,800 123
Lockheed 2,900 202
McDonnell Douglas 2,000 231
Northrop 1,700 77
Parker Hannifin 2,300 92
Teledyne 3,700 59
Textron 4,300 219
United Technologies 6,900 432
TOTAL AIRCRAFT 2,188
APPAREL/TEXTILES--0.2%
Hartmarx* 4,300 23
Liz Claiborne 2,500 57
Oshkosh B'Gosh, Class A 2,600 37
Russell 1,200 37
Springs Industries 1,100 40
V.F. 2,600 128
TOTAL APPAREL/TEXTILES 322
AUTOMOTIVE--2.9%
Allied Signal 12,800 437
Briggs And Stratton 900 63
Chrysler 17,200 772
Dana 4,400 123
Echlin 3,200 97
Fleetwood Enterprises 2,600 65
Ford Motor 48,800 1,354
General Motors 36,300 1,703
Navistar International* 2,600 $ 36
Paccar 1,495 68
Varity* 1,900 71
TOTAL AUTOMOTIVE 4,789
BANKS--5.7%
Banc One 19,767 591
Bank Of Boston 4,300 114
Bankamerica 17,900 790
Bankers Trust New York 3,900 260
Barnett Banks 4,100 181
Boatmens Bancshares 5,200 162
Chase Manhattan 8,600 298
Chemical Banking 12,300 431
Citicorp 19,900 844
Corestates Financial Group 6,000 160
First Chicago 5,500 252
First Fidelity Bancorp 3,500 147
First Interstate Bancorp 3,900 316
First Union 9,300 402
Fleet Financial Group 6,000 226
Golden West Financial 3,000 119
Great Western Financial 6,800 131
H.F. Ahmanson 5,900 123
J.P. Morgan 9,400 571
Keycorp 11,100 339
MBNA 6,900 160
Nationsbank 13,100 642
NBD Bancorp 7,200 206
Norwest 16,300 403
PNC Bank 12,300 318
Shawmut National 7,800 162
Suntrust Banks 6,000 293
U S Bancorp Oregon 4,300 110
Wachovia 7,400 239
Wells Fargo 2,700 392
TOTAL BANKS 9,382
BEAUTY PRODUCTS--1.8%
Alberto Culver 3,400 79
Avon Products 3,500 209
Colgate Palmolive 7,700 447
Ecolab 3,200 70
International Flavors &
Fragrances 4,800 200
Procter & Gamble 33,300 1,985
TOTAL BEAUTY PRODUCTS 2,990
BROADCASTING, NEWSPAPERS & ADVERTISING--1.0%
Capital Cities ABC 7,000 574
CBS 507 163
Comcast, Class A Special 10,200 156
Interpublic Group 2,600 86
Scientific-Atlanta 1,900 $ 78
Tele Communications, Class A* 28,100 623
TOTAL BROADCASTING, NEWSPAPERS
& ADVERTISING 1,680
BUILDING & CONSTRUCTION--0.4%
Centex 1,600 37
Fluor 3,900 195
Foster Wheeler 3,400 117
Halliburton 4,700 148
Mcdermott International 3,900 100
Pulte 1,800 39
TOTAL BUILDING & CONSTRUCTION 636
CHEMICALS--3.8%
Air Products & Chemical 5,200 243
Dow Chemical 13,400 1,049
E.I. Dupont De Nemour 33,000 1,913
Eastman Chemical 3,875 211
Eli Lilly 14,100 816
First Mississippi 4,200 85
FMC* 1,500 93
Great Lakes Chemical 3,500 206
Hercules 2,300 237
Monsanto 5,400 434
Morton International 7,800 215
Nalco Chemical 3,400 112
Rohm & Haas 2,800 160
Sigma Aldrich 2,400 85
Union Carbide 7,400 252
W.R. Grace 4,300 178
TOTAL CHEMICALS 6,289
COMMUNICATIONS EQUIPMENT--1.6%
Andrew* 1,900 95
Motorola 27,100 1,430
Northern Telecom 11,200 389
Sprint 16,700 637
Zenith Electronics* 3,200 36
TOTAL COMMUNICATIONS EQUIPMENT 2,587
COMPUTERS & SERVICES--3.0%
Amdahl* 11,300 99
Apple Computer 5,700 192
Compaq Computer* 12,300 401
Computer Associates International 8,200 365
Cray Research* 3,000 62
Data General* 5,800 58
Digital Equipment* 6,300 167
DSC Communications* 6,000 171
Harris 1,800 $ 88
Hewlett Packard 11,900 1,040
Intergraph* 13,100 120
International Business Machines 28,300 1,965
Tandem Computers* 5,200 85
Tandy 4,080 175
TOTAL COMPUTERS & SERVICES 4,988
CONCRETE & MINERAL PRODUCTS--0.1%
Armstrong World Industries 1,100 48
Owens Corning Fiberglass* 1,500 50
TOTAL CONCRETE & MINERAL PRODUCTS 98
CONSUMER PRODUCTS--0.1%
Brown Group 2,000 68
Stride Rite 1,600 22
TOTAL CONSUMER PRODUCTS 90
CONTAINERS & PACKAGING--0.2%
Ball 1,900 54
Crown Cork & Seal* 4,100 158
Newell 7,200 160
TOTAL CONTAINERS & PACKAGING 372
DRUGS--6.9%
Abbott Laboratories 38,700 1,214
Allergan 2,200 56
Alza, Class A* 2,600 54
American Cyanamid 5,100 507
American Home Products 14,600 876
Amgen* 6,500 346
Baxter International 13,500 380
Bristol-myers Squibb 24,900 1,429
Johnson & Johnson 31,300 1,616
Mallinckrodt Group 3,000 97
Merck 62,300 2,211
National Intergroup* 4,300 68
Pfizer 15,600 1,078
Schering Plough 9,300 660
Upjohn 7,900 270
Warner Lambert 6,300 506
TOTAL DRUGS 11,368
ELECTRICAL SERVICES--3.3%
American Electric Power 8,300 260
Baltimore Gas & Electric 7,300 168
Carolina Power & Light 7,600 200
Central & South West 8,700 194
Consolidated Edison New York 10,400 259
Detroit Edison 6,800 173
Dominion Resources Of Virginia 7,400 276
Duke Power 10,400 $ 406
Entergy 10,800 251
Houston Industries 5,800 204
Niagara Mohawk Power 6,000 80
Northern States Power 2,700 114
Ohio Edison 7,600 144
Pacific Gas & Electric 20,000 455
Pacificorp 12,100 204
PECO Energy 10,800 274
PSI Resources 3,200 72
Public Service Enterprise Group 12,300 323
SCE 19,400 252
Southern 31,600 589
Texas Utilities 10,000 326
Union Electric 6,300 220
TOTAL ELECTRICAL SERVICES 5,444
ELECTRICAL TECHNOLOGY--2.9%
AMP 4,700 364
General Electric 83,300 4,008
Texas Instruments Incorporated 4,600 315
TOTAL ELECTRICAL TECHNOLOGY 4,687
ENTERTAINMENT--1.0%
Blockbuster Entertainment 11,700 335
King World Productions* 1,700 65
Unicom 9,600 214
Walt Disney 26,100 1,015
TOTAL ENTERTAINMENT 1,629
ENVIRONMENTAL SERVICES--0.6%
Browning Ferris Industries 8,100 257
Rollins Enviromental Services* 13,300 81
WMX Technologies 24,300 702
TOTAL ENVIRONMENTAL SERVICES 1,040
FINANCIAL SERVICES--2.5%
American Express 25,700 781
Beneficial 2,800 114
Dean Witter Discover 7,886 297
Eaton 4,200 200
Federal Home Loan Mortgage 9,100 486
Federal National Mortgage 13,300 1,047
Household International 4,300 154
Mellon Bank 4,700 264
Merrill Lynch 9,600 332
Salomon Brothers 5,300 209
Transamerica 3,423 172
Unisys* 5,600 60
TOTAL FINANCIAL SERVICES 4,116
FOOD, BEVERAGE & TOBACCO--8.9%
Adolph Coors, Class B 3,600 $ 67
American Brands 9,300 337
Anheuser Busch 12,900 656
Archer Daniels Midland 16,122 419
Borden 5,000 69
Brown Forman, Class B 3,300 89
Campbell Soup 11,800 466
Coca Cola 63,000 3,062
Conagra 11,200 353
CPC International 6,900 349
General Mills 7,200 416
H.J. Heinz 12,400 454
Hershey Foods 4,700 212
Kellogg 10,600 608
N V Unilever 7,800 884
Pepsico 38,900 1,289
Pet 3,700 73
Philip Morris 42,700 2,610
Quaker Oats 3,300 252
Ralston-ralston Purina Group 5,000 207
Sara Lee 25,300 569
Seagram 17,500 529
UST 8,900 255
Whitman 8,600 144
Wrigley William Jr 6,900 281
TOTAL FOOD, BEVERAGE & TOBACCO 14,650
GAS/NATURAL GAS--1.1%
Coastal 4,800 134
Columbia Gas Systems* 2,200 59
Consolidated Natural Gas 5,700 222
Eastern Enterprises 4,700 123
Enron 11,800 357
Nicor 2,200 53
Noram Energy 15,200 99
Oneok 4,700 79
Pacific Enterprises 3,200 68
Panhandle Eastern 5,300 123
Peoples Energy 4,900 129
Sonat 4,400 138
Williams Companies 5,000 150
TOTAL GAS/NATURAL GAS 1,734
GLASS PRODUCTS--0.4%
Corning 9,400 304
PPG Industries 9,600 381
TOTAL GLASS PRODUCTS 685
HOTELS & LODGING--0.3%
Hilton Hotels 2,200 $ 132
Marriott 6,200 179
Promus Companies* 4,800 161
TOTAL HOTELS & LODGING 472
HOUSEHOLD APPLIANCES--1.0%
Clorox 2,400 125
Gillette 10,200 722
Illinois Tool Works 4,700 201
Maytag 3,100 50
National Service Industries 2,800 74
Raychem 2,100 86
Sherwin Williams 3,300 103
Snap-On Tools 1,200 42
Stanley Works 1,800 73
Whirlpool 3,300 170
TOTAL HOUSEHOLD APPLIANCES 1,646
HOUSEHOLD FURNITURE & FIXTURES--0.1%
Bassett Furniture Industries 1,687 44
Masco 7,100 171
TOTAL HOUSEHOLD FURNITURE & FIXTURES 215
HOUSEHOLD PRODUCTS--0.1%
Premark International 3,200 135
INSURANCE--3.2%
Aetna Life & Casualty 5,200 241
Alexander & Alexander Services 4,200 82
American General 9,800 266
American International Group 15,450 1,373
Chubb 4,700 334
Cigna 4,000 247
Continental 3,500 47
FPL Group 8,600 280
General Re 3,800 402
Jefferson-Pilot 2,550 135
Lincoln National 3,800 142
Marsh & McLennan Companies 3,400 266
Providian 4,000 126
Safeco 2,700 139
St Paul Companies 3,800 154
Torchmark 2,750 121
Travelers 14,825 487
UNUM 3,700 170
USF & G 9,500 126
USLife 1,400 46
TOTAL INSURANCE 5,184
LEASING & RENTING--0.2%
Pitney Bowes 7,100 $ 252
LUMBER & WOOD PRODUCTS--0.3%
Georgia Pacific 4,000 306
Louisiana Pacific 5,100 169
Skyline 4,000 81
TOTAL LUMBER & WOOD PRODUCTS 556
MACHINERY--1.9%
Baker Hughes 5,400 101
Black And Decker 3,900 85
Brunswick 4,400 89
Caterpilliar 9,900 536
Cincinnati Milacron 2,200 57
Clark Equipment* 900 62
Crane 1,600 41
Deere 3,600 247
Dover 2,100 119
Dresser Industries 8,000 162
Emerson Electric 10,900 650
Giddings & Lewis 2,300 41
Harnischfeger Industries 2,800 74
Ingersoll Rand 4,300 152
Outboard Marine 4,900 111
SPX 4,700 81
Tenneco 8,000 353
Timken 1,500 56
Tyco International 1,700 81
Zurn Industries 3,700 73
TOTAL MACHINERY 3,171
MEASURING DEVICES--0.4%
General Signal 3,000 105
Honeywell 5,700 196
Johnson Controls 1,700 85
Millipore 2,000 108
Pall 4,000 69
Perkin Elmer 2,600 82
Tektronix 2,400 93
TOTAL MEASURING DEVICES 738
MEDICAL PRODUCTS & SERVICES--1.7%
Bausch & Lomb 2,200 86
Becton Dickinson 3,900 188
Beverly Enterprises* 4,100 63
Biomet* 7,300 90
C.R. Baird 2,700 68
Columbia/HCA Healthcare 17,437 759
Community Psychiatric Centers 5,500 75
Manor Care 2,300 61
Medtronic 5,000 264
National Medical Enterprises 7,800 $ 134
St. Jude Medical 2,800 100
U.S. Healthcare 7,500 349
United Healthcare 8,000 424
United States Surgical 4,200 113
TOTAL MEDICAL PRODUCTS & SERVICES 2,774
METALS & MINING--1.5%
Alcan Aluminium* 12,500 330
Aluminum America 4,000 336
Armco* 12,200 73
Asarco 3,200 105
Bethlehem Steel* 3,500 74
Cyprus Amax Minerals 4,450 139
Englehard 4,275 115
Inco Limited 5,800 175
Inland Steel Industries* 2,100 83
Newmont Mining 4,243 191
Nucor 3,900 272
Phelps Dodge 3,300 205
Reynolds Metals 2,500 142
USX U.S. Steel Group 3,000 126
Worthington Industries 3,150 68
TOTAL METALS & MINING 2,434
MISCELLANEOUS BUSINESS SERVICES--2.3%
Autodesk 1,400 88
Automatic Data Processing 6,600 370
Ceridian* 3,500 86
Cisco Systems* 11,600 318
Computer Sciences* 2,400 104
Lotus Development* 2,000 74
Microsoft* 28,000 1,571
Novell* 17,400 257
Ogden 3,200 67
Oracle Systems* 14,100 606
Safety Kleen 5,100 83
Shared Medical Systems 2,500 69
Sun Microsystems* 3,500 103
TOTAL MISCELLANEOUS BUSINESS SERVICES 3,796
MISCELLANEOUS CONSUMER SERVICES--0.2%
H & R Block 4,800 220
Service International 3,400 88
TOTAL MISCELLANEOUS CONSUMER SERVICES 308
MULTI-INDUSTRY--1.0%
Dial 3,200 67
ITT 5,500 459
Minnesota Mining & Manufacturing 20,600 1,138
TOTAL MULTI-INDUSTRY 1,664
OFFICE EQUIPMENT--0.3%
Xerox 5,100 $ 544
OIL - DOMESTIC--1.4%
Amerada Hess* 3,900 181
Ashland Oil 2,100 74
Burlington Resources 6,000 225
Enserch 6,000 83
Helmerich & Payne 2,100 59
Kerr-McGee 2,900 141
Louisiana Land & Exploration 1,000 44
Maxus Energy* 17,100 77
Oryx Energy 8,800 122
Pennzoil 2,100 98
Rowan* 7,200 52
Santa Fe Energy Resources 8,400 78
Schlumberger 11,600 632
Transco Energy 3,800 57
Unocal 10,700 302
Western Atlas* 2,100 92
TOTAL OIL-DOMESTIC 2,317
OIL - INTERNATIONAL--8.0%
Amoco 24,200 1,434
Atlantic Richfield 7,400 746
Chevron 31,700 1,320
Exxon 60,500 3,487
Mobil 19,400 1,535
Occidental Petroleum 14,900 313
Phillips Petroleum 12,100 414
Royal Dutch Petroleum 26,100 2,802
Sun 5,500 158
Texaco 12,600 756
USX Marathon Group 13,300 236
TOTAL OIL-INTERNATIONAL 13,201
PAPER & PAPER PRODUCTS--1.8%
Avery Dennison 1,800 62
Bemis 2,400 59
Boise Cascade 4,200 124
Champion International 4,300 167
Federal Paper Board 3,900 123
International Paper 6,000 470
James River 5,700 138
Kimberly Clark 7,400 435
Mead 2,300 120
Potlatch 1,700 70
Scott Paper 3,600 220
Stone Container 2,400 47
Temple Inland 2,100 116
Union Camp 3,200 157
Westvaco 3,800 145
Weyerhaeuser 9,500 $ 424
TOTAL PAPER & PAPER PRODUCTS 2,877
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--0.6%
Eastman Kodak 15,500 803
Polaroid 3,000 105
TOTAL PHOTOGRAPHIC EQUIPMENT & SUPPLIES 908
PRECIOUS METALS--0.5%
American Barrick Resources* 13,100 349
Echo Bay Mines 5,600 77
Homestake Mining 6,400 136
Placer Dome 10,800 271
TOTAL PRECIOUS METALS 833
PRINTING & PUBLISHING--1.5%
American Greetings, Class A 4,000 116
Deluxe 3,200 94
Dow Jones 4,300 129
Gannett 7,600 365
John H. Harland 5,500 116
Knight-Ridder 2,000 100
McGraw Hill 2,000 147
Meredith 1,800 84
Moore 4,500 83
New York Times, Class A 6,400 140
R.R. Donnelly & Sons 6,500 195
Time Warner 18,400 643
Times Mirror, Class A 5,500 169
Tribune 2,900 157
TOTAL PRINTING & PUBLISHING 2,538
PROFESSIONAL SERVICES--0.3%
Dun & Bradstreet 8,300 478
National Education* 15,500 79
TOTAL PROFESSIONAL SERVICES 557
RAILROADS--1.1%
Burlington Northern 4,100 206
Conrail 3,700 183
CSX 4,800 329
Norfolk Southern 6,400 398
Santa Fe Pacific 8,400 190
Union Pacific 10,000 537
TOTAL RAILROADS 1,843
REAL ESTATE--0.1%
Kaufman & Broad Home 7,800 106
REPAIR SERVICES--0.0%
Ryder System 2,500 64
RETAIL--7.1%
Albertsons 13,000 $ 379
American Stores 6,600 167
Bruno's 7,100 66
Charming Shoppes 14,400 117
Circuit City Stores 3,200 83
Dayton Hudson 3,300 252
Dillard Department Stores 5,100 136
Gap 6,700 220
Genesco* 5,700 14
Giant Food 2,400 52
Great Atlantic & Pacific 2,200 56
Harcourt General 4,100 141
Hasbro 4,400 130
Home Depot 21,133 887
J.C. Penney 11,700 604
K Mart 22,200 397
Kroger* 6,800 181
Longs Drug Stores 2,400 83
Lowes 8,700 336
Lubys Cafeterias 1,500 35
Mattel 7,812 212
May Department Stores 11,500 453
McDonalds 33,400 877
Melville 5,000 178
Mercantile Stores 1,800 75
Nordstrom 4,500 180
Pep Boys-Manny Moe & Jack 2,900 101
Price/Costco* 12,256 197
Rite Aid 2,600 54
Ryans Family Steakhouses* 17,800 106
Sears Roebuck 16,400 787
Shoneys* 7,800 108
The Limited 17,700 347
TJX Companies 2,300 48
Toys R Us* 13,100 467
Wal-Mart Stores 111,900 2,613
Walgreen 5,200 196
Wendy's International 5,800 84
Winn Dixie Stores 3,800 190
Woolworth 5,400 94
TOTAL RETAIL 11,703
RUBBER & PLASTIC--0.5%
B.F. Goodrich 1,000 42
Cooper Tire & Rubber 3,000 70
Goodyear Tire & Rubber 7,000 234
Nike, Class B 3,400 200
Reebok International 3,500 125
Rubbermaid 6,700 178
TOTAL RUBBER & PLASTIC 849
SEMI-CONDUCTORS/INSTRUMENTS--0.9%
Advanced Micro Devices* 3,300 $ 98
Intel 20,400 1,255
M/A-Com* 5,900 45
National Semiconductor* 5,000 78
Thomas & Betts 800 54
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 1,530
SPECIALTY MACHINERY--0.9%
Ameritech 26,300 1,058
Cooper Industries 5,100 205
Westinghouse Electric 16,200 211
TOTAL SPECIALTY MACHINERY 1,474
TELEPHONES & TELECOMMUNICATION--8.2%
Airtouch Communications* 23,200 664
American Telephone & Telegraph 86,000 4,646
Bell Atlantic 21,200 1,124
Bellsouth 24,200 1,349
GTE 46,600 1,415
MCI Communications 25,500 653
NYNEX 21,300 820
Pacific Telesis Group 20,500 630
Southwestern Bell 29,200 1,241
U S West 22,100 856
TOTAL TELEPHONES & TELECOMMUNICATION 13,398
TRUCKING--0.2%
Consolidated Freightways* 3,100 68
Pittston Services Group 2,000 57
Roadway Services 1,800 104
Yellow 1,500 28
TOTAL TRUCKING 257
WHOLESALE--0.8%
Alco Standard 2,400 149
Cummins Engine 1,200 47
Fleming 3,200 75
Genuine Parts 6,450 225
McKesson 2,200 224
Praxair 8,400 205
Super-Valu 3,100 81
Sysco 8,700 221
W W Grainger 2,000 119
TOTAL WHOLESALE 1,346
TOTAL COMMON STOCKS (Cost $157,399) 163,561
MASTER NOTES--0.3%
Heller Master Note--(A)
4.935%, 10/03/94 $451 $ 451
TOTAL MASTER NOTES (Cost $451) 451
TOTAL INVESTMENTS--99.7%
(Cost $157,850) 164,012
OTHER ASSETS AND LIABILITIES--0.3%
Other assets and liabilities, net 463
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 15,335,999 outstanding shares 156,385
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
70,968 outstanding shares 727
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based on
2,686 outstanding shares 29
Undistributed net investment income 38
Accumulated net realized gain on
investments 1,134
Net unrealized appreciation of
investments 6,162
TOTAL NET ASSETS:--100.0% $164,475
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 10.67
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.68
MAXIMUM SALES CHARGE OF 4.50% (1) .50
OFFERING PRICE PER SHARE-- RETAIL CLASS A $ 11.18
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 10.66
* Non-income producing security
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of September 30, 1994. The date shown is the longer
of the reset or demand date.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
EQUITY INCOME FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--52.6%
BANKS--3.1%
National City 21,000 $591
CHEMICALS--0.9%
Dupont (E.I.) de Nemours 3,000 174
DRUGS--4.5%
Abbott Laboratories 14,000 439
Johnson & Johnson 5,900 305
Pfizer 1,900 131
TOTAL DRUGS 875
ELECTRICAL UTILITIES--4.5%
Detroit Edison 15,000 382
FPL Group 7,000 228
Unicom 11,800 263
TOTAL ELECTRICAL UTILITIES 873
FINANCIAL SERVICES--0.8%
American Express 4,900 149
FOOD, BEVERAGE & TOBACCO--5.2%
Pepsico 4,700 156
Philip Morris 9,300 568
Sara Lee 12,600 284
TOTAL FOOD, BEVERAGE & TOBACCO 1,008
HOUSEHOLD PRODUCTS--2.7%
Newell 23,000 512
INSURANCE--1.2%
Old Republic International 2,200 46
Providian 6,000 189
TOTAL INSURANCE 235
MACHINERY--6.0%
General Electric 17,000 818
Tenneco 7,900 349
TOTAL MACHINERY 1,167
MARINE TRANSPORTATION--0.9%
Anangel-American Shipholdings
(ADR) 11,700 181
MINING--0.3%
Great Northern Iron Ore Properties 1,300 62
OIL - DOMESTIC--4.7%
Atlantic Richfield 8,000 807
Schlumberger 2,000 109
TOTAL OIL-DOMESTIC 916
OIL - INTERNATIONAL--6.8%
Amoco 5,100 $ 302
Exxon 8,000 461
Mobil 6,900 546
TOTAL OIL-INTERNATIONAL 1,309
PAPER & PAPER PRODUCTS--2.4%
Kimberly Clark 7,900 464
REAL ESTATE--1.2%
Burger King Investors Master L.P. 13,500 228
RETAIL--1.1%
Albertson's 4,000 117
Sears Roebuck 2,000 96
TOTAL RETAIL 213
TELEPHONES & TELECOMMUNICATION--6.3%
AT&T 5,900 319
NYNEX 13,000 500
Pacific Telesis Group 13,000 400
TOTAL TELEPHONES & TELECOMMUNICATION 1,219
TOTAL COMMON STOCKS (Cost $10,188) 10,176
REAL ESTATE INVESTMENT TRUSTS--11.9%
Crescent Real Estate Equities 3,800 107
Healthcare Realty Trust 19,500 407
Manufactured Home Communities 21,000 420
National Golf Properties 22,700 459
Simon Property Group 21,000 535
Weeks* 17,500 359
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $2,326) 2,287
PREFERRED STOCKS--6.8%
AUTOMOTIVE--5.1%
Ford Motor, Ser A, CV, $4.20 7,500 688
General Motors, Ser C, CV, $3.25 5,000 288
TOTAL AUTOMOTIVE 976
BANKS--1.3%
Citicorp, Ser 15, CV, $1.217 13,300 259
RETAIL--0.4%
Sears Roebuck, Ser A, CV 1,500 84
TOTAL PREFERRED STOCKS (Cost $1,348) 1,319
CONVERTIBLE BONDS--12.2%
Conner Peripheral
6.500%, 03/01/02 $200 $ 157
General Instrument
5.000%, 06/15/00 350 458
Inco
5.750%, 07/01/04 400 478
Integrated Health
Services
6.000%, 01/01/03 250 301
Price
6.750%, 03/01/01 375 363
Vencor
6.000%, 10/01/02 500 602
TOTAL CONVERTIBLE BONDS (Cost
$2,346) 2,359
REPURCHASE AGREEMENTS--15.4%
J.P. Morgan 4.594%, dated
09/30/94, matures 10/03/94,
repurchase price $1,948,817
(collateralized by a Treasury
Interest Strip Coupon, total par
value $10,544,810, matures
02/15/15, market value $1,987,064) 1,948
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $1,032,963
(collateralized by a U.S. Treasury
Note, total par value $1,049,644,
interest rate 4.25%, matures
01/31/95, market value $1,053,428) 1,033
TOTAL REPURCHASE AGREEMENTS (Cost
$2,981) 2,981
TOTAL INVESTMENTS--98.9% (Cost
$19,189) $19,122
* Non-income producing security
ADR--American Depository Receipt
DIVERSIFIED GROWTH FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCK--84.2%
AUTOMOTIVE--2.7%
Ford Motor 27,000 $ 749
General Motors, Class E 4,000 152
TOTAL AUTOMOTIVE 901
COMMUNICATIONS EQUIPMENT--2.8%
Nokia (ADR) 16,100 942
COMPUTER PERIPHERAL EQUIPMENT--2.1%
Cisco Systems* 25,700 704
ELECTRICAL UTILITIES--.9%
Detroit Edison 12,000 306
ENVIRONMENTAL SERVICES--1.7%
Wmx Technologies 20,000 578
FINANCIAL SERVICES--3.9%
American Express 16,500 501
Federal National Mortgage 10,400 819
TOTAL FINANCIAL SERVICES 1,320
FOOD, BEVERAGE & TOBACCO--4.2%
Cott 11,600 154
Pepsico 16,000 530
Philip Morris Companies 12,000 733
TOTAL FOOD, BEVERAGE & TOBACCO 1,417
HOUSEHOLD PRODUCTS--1.4%
Newell 21,000 467
INSURANCE--0.6%
Old Republic
International 10,000 209
MACHINERY--5.3%
General Electric 23,300 1,121
Tenneco Incoporated 15,400 680
TOTAL MACHINERY 1,801
MARINE TRANSPORTATION--.9%
Royal Caribbean Cruises 12,300 320
MEASURING DEVICES--1.2%
MTS Systems 8,000 194
Thermo Electron* 4,500 206
TOTAL MEASURING DEVICES 400
MEDICAL PRODUCTS & SERVICES--3.8%
Healthtrust* 24,400 803
Medtronic 9,200 486
TOTAL MEDICAL PRODUCTS & SERVICES 1,289
MISCELLANEOUS BUSINESS SERVICES--6.2%
Microsoft* 5,500 $ 309
Novell* 23,500 347
Oracle Systems* 23,100 993
Synopsys* 2,700 122
The Bisys Group* 16,000 340
TOTAL MISCELLANEOUS
BUSINESS SERVICES 2,111
OIL/CHEMICALS--10.5%
Amoco 9,000 533
Atlantic Richfield 8,700 876
Dupont (E.I.) de Nemours 10,500 609
Exxon 8,800 507
Mobil 4,600 364
Schlumberger 6,400 348
Sigma-Aldrich 9,000 320
TOTAL OIL/CHEMICALS 3,557
PAPER & PAPER PRODUCTS--2.9%
Kimberly-Clark 6,700 394
Weyerhaeuser 12,900 575
TOTAL PAPER & PAPER PRODUCTS 969
PHARMACEUTICAL PREPARATIONS--7.1%
Abbott Laboratories 23,500 737
Johnson & Johnson 16,000 826
Perrigo* 20,000 270
Pfizer 8,000 553
TOTAL PHARMACEUTICAL PREPARATIONS 2,386
RAILROADS--0.7%
Southern Pacific Rail* 13,000 244
REAL ESTATE--4.0%
Debartolo Realty 26,000 377
National Golf Properties 15,000 304
Simon Property Group 25,700 658
TOTAL REAL ESTATE 1,339
RETAIL--7.8%
Albertson's 19,300 562
Dayton Hudson 8,000 612
McDonald's 26,000 683
Orchard Suppply Hardware
Stores* 12,900 119
Sears & Roebuck 13,500 648
TOTAL RETAIL 2,624
SEMI-CONDUCTORS/INSTRUMENTS--1.9%
Intel 10,400 640
SPECIALTY MACHINERY--2.8%
York International 23,000 $ 957
STEEL & STEEL WORKS--3.0%
Ak Steel Holding* 12,000 390
Inco 15,200 458
Rouge Steel, Class A 6,000 176
TOTAL STEEL & STEEL WORKS 1,024
TELEPHONES & TELECOMMUNICATION--4.9%
Airtouch
Communications* 14,700 421
Pacific Telesis Group 14,000 431
Tele Danmark (ADR)* 5,500 150
Vodafone (ADR) 20,500 642
TOTAL TELEPHONES &
TELECOMMUNICATION 1,644
TRUCKING--0.9%
Fritz Companies* 8,100 288
TOTAL COMMON STOCKS (Cost $28,121) 28,437
CONVERTIBLE BONDS--1.9%
General Instrument Cv
5.000%, 06/15/00 $ 500 654
TOTAL CONVERTIBLE BONDS (Cost
$687) 654
REPURCHASE AGREEMENTS--9.2%
J.P. Morgan 4.594%, dated
09/30/94, matures 10/03/94,
repurchase price $1,779,444
(collateralized by a Treasury
Interest Coupon Note, par value
$9,628,355, maturity 02/15/15,
market value $1,814,367) 1,779
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $1,345,262
(collateralized by a U.S. Treasury
Note, par value $1,366,987,
interest rate 4.25%, maturity of
01/31/95, market value $1,371,915) 1,345
TOTAL REPURCHASE AGREEMENTS
(Cost $3,124) 3,124
TOTAL INVESTMENTS--95.3% (Cost
$31,932) $32,215
* Non-income producing security
ADR--American Depository Receipt
STOCK FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--92.5%
APPAREL/TEXTILES--1.9%
Liz Claiborne 134,900 $ 3,069
AUTOMOTIVE--2.9%
Automotive Industries* 61,100 1,482
General Motors 69,500 3,257
TOTAL AUTOMOTIVE 4,739
BANKS--3.6%
Banc One 61,400 1,834
BayBanks 32,500 1,788
Chemical Banking 62,600 2,191
TOTAL BANKS 5,813
BUILDING & CONSTRUCTION SUPPLIES--0.6%
Instrument Systems* 123,400 972
CHEMICALS--0.9%
Ferro 62,200 1,532
COMPUTERS & SERVICES--4.5%
Hewlett Packard 44,500 3,888
IBM 50,400 3,503
TOTAL COMPUTERS & SERVICES 7,391
DIVERSIFIED--1.6%
International Paper 32,900 2,583
DRUGS--4.6%
American Home Products 59,500 3,570
Bristol-Myers Squibb 39,200 2,249
Upjohn 51,900 1,771
TOTAL DRUGS 7,590
ELECTRICAL UTILITIES--0.7%
Hawaiian Electric 38,100 1,205
FOOD, BEVERAGE & TOBACCO--5.1%
ConAgra 133,700 4,212
Quaker Oats 21,300 1,629
Sara Lee 112,000 2,520
TOTAL FOOD, BEVERAGE & TOBACCO 8,361
HOME APPLICANCES--1.4%
Whirlpool 44,700 2,296
INSURANCE--6.9%
AMBAC 81,600 3,019
General Re 32,000 3,388
Providian 102,400 3,226
Western National 120,300 $ 1,624
TOTAL INSURANCE 11,257
MACHINERY--6.9%
Case Equipment 55,400 1,080
Caterpillar 36,600 1,981
Deere 39,400 2,704
General Electric 95,000 4,572
Ingersoll Rand 28,900 1,022
TOTAL MACHINERY 11,359
MEDICAL--2.0%
Bausch & Lomb 49,600 1,934
Becton, Dickinson 28,100 1,356
TOTAL MEDICAL 3,290
METALS & MINING--4.3%
Aluminum Company of America 51,600 4,373
Inco 87,400 2,633
TOTAL METALS & MINING 7,006
MULTI-INDUSTRY--5.1%
Dial 67,800 1,415
ITT 45,000 3,752
Minnesota Mining &
Manufacturing 58,300 3,221
TOTAL MULTI-INDUSTRY 8,388
OIL - INTERNATIONAL--9.3%
Exxon 53,600 3,089
Mobil 39,700 3,141
Royal Dutch Petroleum (ADR) 45,500 4,887
Texaco 67,300 4,038
TOTAL OIL-INTERNATIONAL 15,155
PAPER & PAPER PRODUCTS--5.4%
Bemis 116,800 2,892
Bowater 57,800 1,683
James River 69,500 1,685
Scott Paper 42,700 2,610
TOTAL PAPER & PAPER PRODUCTS 8,870
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--4.6%
Eastman Kodak 82,700 4,280
Xerox 30,700 3,277
TOTAL PHOTOGRAPHIC EQUIPMENT
& SUPPLIES 7,557
RAILROADS--3.5%
CSX 40,500 $ 2,774
Norfolk Southern 21,900 1,363
Southern Pacific Rail* 82,700 1,551
TOTAL RAILROADS 5,688
RETAIL--2.0%
Dayton Hudson 42,000 3,213
RUBBER & PLASTIC--3.0%
Premark International 75,200 3,177
Reebok International 49,700 1,777
TOTAL RUBBER & PLASTIC 4,954
SEMICONDUCTORS & RELATED DEVICES--3.2%
AMP 25,100 1,942
Texas Instruments 48,500 3,316
TOTAL SEMICONDUCTORS & RELATED DEVICES 5,258
SPECIALTY MACHINERY--1.1%
York International 43,800 1,823
TELEPHONES & TELECOMMUNICATION--3.0%
Century Telephone Enterprises 60,100 1,735
GTE 103,700 3,150
TOTAL TELEPHONES & TELECOMMUNICATION 4,885
WHOLESALE--0.7%
(W.W.) Grainger 20,300 1,203
TOTAL COMMON STOCKS (Cost $137,541) 145,457
REAL ESTATE INVESTMENT TRUSTS--3.7%
Debartolo Realty 161,400 2,340
Duke Realty Investments 65,400 1,635
Simon Property Group 78,500 2,012
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $5,842) 5,987
MASTER NOTES--9.8%
Associates Corporation of North America (A)
4.813%, 10/04/94 $2,066 2,066
Barclays (A)
4.779%, 10/03/94 2,225 2,225
Goldman Sachs (A)
4.950%, 10/04/94 5,876 5,876
Heller Financial (A)
4.935%, 10/04/94 5,905 5,905
TOTAL MASTER NOTES (Cost $16,072) 16,072
TOTAL INVESTMENTS--102.3%
(Cost $159,455) 167,516
OTHER ASSETS AND LIABILITIES--(2.3%)
Other assets and liabilties, net (3,800)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
9,388,570 outstanding
shares $140,908
Portfolio shares of
Retail Class A ($.0001
par value--2 billion
authorized) based on
510,016 outstanding
shares 7,677
Portfolio shares of
Retail Class B ($.0001
par value--2 billion
authorized) based on
20,964 outstanding
shares 351
Undistributed net
investment income 52
Accumulated net
realized gain on
investments 6,667
Net unrealized
appreciation of
investments 8,061
TOTAL NET
ASSETS:--100.0% $163,716
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 16.50
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 16.51
MAXIMUM SALES CHARGE OF
4.50% (1) .78
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 17.29
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 16.49
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30,1994. The
date shown is the longer of the reset date or demand date.
ADR--American Depository Receipt
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
SPECIAL EQUITY FUND
DESCRIPTION SHARES/PAR (000) VALUE (000)
COMMON STOCK--75.5%
AIRCRAFT--1.2%
Northrop 35,000 $1,584
AUTOMOTIVE--0.3%
Oshkosh Truck Class B 42,200 459
BANKS--6.4%
Ahmanson (H.F.) 46,400 969
Bank of Boston 118,800 3,162
Chemical Banking 58,100 2,034
Great Western Financial 66,800 1,286
PNC Bank 50,600 1,309
TOTAL BANKS 8,760
CHEMICALS--5.4%
First Mississippi 38,100 772
IMC Fertilizer Group* 108,000 4,805
Melamine Chemicals* 31,400 330
Nova 128,900 1,418
TOTAL CHEMICALS 7,325
COMMUNICATIONS EQUIPMENT--0.3%
Aydin* 32,700 335
CONSTRUCTION MATERIALS--1.4%
Lafarge 93,300 1,878
DRUGS--0.1%
Quadra Logic* 25,400 171
ELECTRICAL UTILITIES--0.7%
Unicom 41,700 928
FINANCIAL SERVICES--0.9%
Carr Realty 59,200 1,199
FOOD, BEVERAGE & TOBACCO--1.5%
Archer Daniels Midland 79,300 2,062
GAMES, TOYS AND CHILDREN'S VEHICLES--0.1%
Educational Insights* 18,000 119
MACHINERY--0.5%
Brown & Sharpe Manufacturing* 85,700 589
Ferrofluidics* 12,500 72
TOTAL MACHINERY 661
MARINE TRANSPORTATION--4.5%
Overseas Shipholding Group 132,800 2,888
Stolt-Nielsen S.A.* 151,900 3,266
TOTAL MARINE TRANSPORTATION 6,154
METALS & MINING--16.9%
Aluminum Company of America 94,100 $ 7,976
Cleveland-Cliffs 20,100 779
Cominco* 54,700 998
Cyprus AMAX Minerals 35,300 1,103
INCO 181,600 5,471
Nord Resources* 68,500 454
Potash of Saskatchewan 17,600 719
Reynolds Metals 77,500 4,388
USX--U.S. Steel Group 30,600 1,281
TOTAL METALS & MINING 23,169
OIL SERVICES--2.6%
Atwood Oceanics* 44,500 601
Halliburton 62,000 1,953
Sonat Offshore Drilling 33,500 666
Stolt Comex Seaway, S.A.* 33,000 330
TOTAL OIL SERVICES 3,550
OIL - DOMESTIC--13.5%
Amerada Hess 20,100 935
Dekalb Energy* 50,800 800
Diamond Shamrock 21,900 564
Louisiana Land And
Exploration 85,300 3,732
Maxus Energy* 84,900 382
Murphy Oil 27,700 1,205
USX--Marathon Group 267,400 4,746
Valero Energy 252,400 5,111
Wiser Oil 66,300 1,127
TOTAL OIL-DOMESTIC 18,602
OIL - INTERNATIONAL--3.5%
Texaco 80,400 4,824
PAPER & PAPER PRODUCTS--12.0%
Abitibi-Price* 145,700 2,204
Boise Cascade 70,900 2,092
Bowater 179,100 5,215
Champion International 104,100 4,034
Federal Paper Board 89,200 2,810
TOTAL PAPER & PAPER PRODUCTS 16,355
PRECIOUS METALS--5.9%
Agnico-Eagle Mines 55,700 801
Hemlo Gold Mines 231,600 2,663
Newmont Mining 102,099 4,595
TOTAL PRECIOUS METALS 8,059
RETAIL--0.9%
Dayton Hudson 15,500 1,186
SEMICONDUCTORS & RELATED DEVICES--0.2%
Parlex* 24,400 $ 207
WHOLESALE--0.4%
Super Rite* 37,000 490
TOTAL COMMON STOCKS (Cost $97,634) 108,077
MASTER NOTES--14.1%
Associates
4.813%, 10/04/94 (A) $ 5,360 5,360
Barclays
4.779%, 10/03/94 (A) 2,955 2,955
Goldman Sachs
4.950%, 10/04/94 (A) 5,719 5,719
Heller
4.935%, 10/04/94 (A) 5,160 5,160
TOTAL MASTER NOTES
(Cost $19,194) 19,194
REPURCHASE AGREEMENTS--7.7%
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $5,689,060,
(collateralized by U.S. Treasury
Note, 4.25%, par value $5,666,471,
due 1/31/95, market value
$5,812,010.) 5,687
J.P. Morgan 4.594%, dated 09/30/94,
matures 10/03/94, repurchase price
$4,871,677, (collateralized by U.S.
Treasury Interest Coupon Note, total
par value $26,358,697, due 2/15/15,
market value $4,967,209.) 4,870
TOTAL REPURCHASE AGREEMENTS
(Cost $10,557) 10,557
TOTAL INVESTMENTS--101.0%
(Cost $127,384) 137,828
OTHER ASSETS AND LIABILITIES--(1.0%)
Other assets and liabilities, net (1,319)
NET ASSETS
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
7,445,378 outstanding
shares $111,287
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 423,818
outstanding shares 6,311
Portfolio
shares--Retail Class B
($.0001 par value--2
billion authorized)
based on 21,387
outstanding shares 365
Accumulated net
realized gain on
investments 8,102
Net unrealized
appreciation of
investments 10,444
TOTAL NET
ASSETS:--100.0% $136,509
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 17.30
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 17.30
MAXIMUM SALES CHARGE OF
4.50% (1) .82
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 18.12
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 17.29
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30,1994. The
date shown is the longer of the reset date or demand date.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
REGIONAL EQUITY FUND
DESCRIPTION SHARES/PAR (000) VALUE (000)
COMMON STOCKS--76.4%
APPAREL/TEXTILES--2.8%
G&K Services, Class A 125,850 $ 1,951
Raven Industries 54,100 1,014
TOTAL APPAREL/TEXTILES 2,965
AUTOPARTS--4.0%
Automotive Industries* 110,000 2,668
Deflecta-Shield* 101,100 834
Tower Automotive* 59,300 689
TOTAL AUTOPARTS 4,191
BANKING--9.9%
Community First Bankshares 91,300 1,438
Investors Bank 129,766 3,180
Metropolitan Financial 112,000 2,660
TCF Financial 78,000 3,071
TOTAL BANKING 10,349
CHEMICALS--1.9%
Fuller 30,000 900
Hawkins Chemical 157,464 1,102
TOTAL CHEMICALS 2,002
COMMUNICATIONS EQUIPMENT--2.1%
Communications Sysyems 200,000 2,000
Videolabs* 58,300 189
TOTAL COMMUNICATIONS EQUIPMENT 2,189
COMPUTERS & SERVICES--8.0%
Computer Network
Technology* 145,000 1,115
Control Data Systems* 358,100 2,395
Digi International* 182,200 2,596
Fourth Shift* 200,000 1,250
Hutchinson Technology* 37,100 1,020
TOTAL COMPUTERS & SERVICES 8,376
ELECTRONIC COMPONENTS--3.4%
BMC Industries 224,000 3,136
Daktronics* 62,700 423
TOTAL ELECTRONIC COMPONENTS 3,559
ENTERTAINMENT--0.7%
Lodgenet Entertainment* 90,000 765
FINANCIAL SERVICES--2.5%
General Growth Properties 127,000 2,572
FOOD & BEVERAGE--7.8%
Grist Mill* 200,000 $ 1,925
International Multifoods 164,000 2,685
Michael Foods 142,500 1,568
Minnesota Brewing* 147 662
Stokely USA* 139,900 1,329
TOTAL FOOD & BEVERAGE 8,169
MACHINERY--1.8%
Donaldson 87,000 1,936
MEDICAL PRODUCTS & SERVICES--7.8%
Angeion* 430,000 1,156
Biovascular* 313,300 1,493
CNS* 369,300 2,585
Lifecore Biomedical* 200,000 1,075
Medical Devices* 161,200 423
Minntech 93,300 1,446
TOTAL MEDICAL PRODUCTS & SERVICES 8,178
MISCELLANEOUS CONSUMER SERVICES--2.6%
Regis* 185,000 2,729
MISCELLANEOUS MANUFACTURING--2.5%
Recovery Engineering* 102,800 1,722
Shuffle Master* 66,700 884
TOTAL MISCELLANEOUS MANUFACTURING 2,606
MISCELLANEOUS TRANSPORTATION--0.9%
Arctco 50,175 953
PAPER & PAPER PRODUCTS--2.5%
Pentair 65,272 2,578
PRINTING & PUBLISHING--2.3%
IPI* 40,000 160
Merrill 120,000 2,280
TOTAL PRINTING & PUBLISHING 2,440
RETAIL--3.3%
Brauns Fashions* 80,000 280
Damark International* 149,600 1,814
Younkers* 70,000 1,330
TOTAL RETAIL 3,424
RETAIL - EATING PLACES--1.0%
Vicorp Restaurants* 64,300 1,077
RUBBER & PLASTIC--0.1%
Green Isle Environmental
Services* (C) 127,000 64
SEMI-CONDUCTORS & RELATED DEVICES--4.5%
FSI International* 74,500 $ 1,714
Sheldahl* 78,500 903
Zytec* 180,000 2,070
TOTAL SEMI-CONDUCTORS & RELATED DEVICES 4,687
SPECIALTY CONSTRUCTION--0.6%
Apogee Enterprises 35,000 578
TELEPHONES & TELECOMMUNICATION--3.4%
Norstan* 185,000 3,515
TOTAL COMMON STOCKS (Cost $70,464) 79,902
INVESTMENTS IN COMMON STOCK
OF AFFILIATES--10.1%
Aetrium* 248,000 2,789
Audio King* (B) 262,112 1,180
Canterbury Park Holdings* (B) 177,500 799
Navarre* (B) 152,200 628
Northwest Teleproductions* (B) 170,000 595
Rimage* (B) 216,000 1,188
Terrano* (B) 350,000 656
TSI (B) 310,000 2,712
TOTAL INVESTMENTS IN COMMON
STOCK OF AFFILIATES (Cost $10,082) 10,547
MASTER NOTES--13.0%
Associates Corporation of North America
4.813%, 10/04/94 (A) $ 3,029 3,029
Barclays Bank
4.779%, 10/03/94 (A) 3,210 3,210
Goldman Sachs
4.950%, 10/04/94 (A) 3,761 3,761
Heller Financial
4.935%, 10/04/94 (A) 3,578 3,578
TOTAL MASTER NOTES (Cost $13,578) 13,578
TOTAL INVESTMENTS--99.5%
(Cost $94,124) 104,027
OTHER ASSETS AND LIABILITIES--0.5%
Other assets and liabilities, net 548
NET ASSETS
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 7,668,481 outstanding shares $ 85,103
Portfolio shares--Retail Class A ($.0001
par value--2 billion authorized) based on
666,336 outstanding shares 7,204
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based on
14,788 outstanding shares 186
Accumulated net realized gain on
investments 2,179
Net unrealized appreciation
of investments 9,903
TOTAL NET ASSETS--100.0% $104,575
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 12.52
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 12.52
MAXIMUM SALES CHARGE OF 4.50% (1) .59
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 13.11
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $12.50
* Non-income producing security
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset or demand date.
(B) Investments representing five percent or more of the outstanding voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the fiscal year ended
September 30, 1994. The total cost of purchases of Aetrium, Audio King,
Canterbury Holdings, Navarre, Northwest Teleproductions, Rimage, Terrano,
and TSI were $2,559,698, $801,072, $710,000, $856,125, $623,125,
$1,612,585, $689,625, and $2,229,419 respectively. With the exception of
$28,258 in dividend income for TSI, there were neither sales nor dividend
income during the annual period. Change in unrealized appreciation since
9/30/93 in affiliated securities is $464,722.
(C) Security sold within terms of a private placement memorandum, exempt from
registration under Section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited
investors". These securities have been determined to be liquid under
guidelines established by the Board of Directors.
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
EMERGING GROWTH FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--78.0%
AUTOMOTIVE--1.2%
Deflecta-Shield* 9,900 $ 82
BEAUTY PRODUCTS--1.4%
Drypers* 8,000 96
BROADCASTING, NEWSPAPERS & ADVERTISING--3.8%
Bell Cablemedia ADR* 4,500 116
National Wireless
Holdings* 3,800 31
Qualcomm* 4,500 114
TOTAL BROADCASTING,
NEWSPAPERS & ADVERTISING 261
CHEMICALS--0.9%
Fuller (H.B.) 2,100 63
COMMUNICATIONS EQUIPMENT--1.3%
Tellabs* 2,100 89
DRUGS--4.8%
Chiron* 500 33
Genzyme* 2,300 79
Idexx Labs* 4,800 142
Perrigo* 6,100 82
TOTAL DRUGS 336
FINANCIAL SERVICES--7.3%
Advanta Class A 1,700 51
Advanta Class B 500 15
Concord Holding* 7,600 63
Fiserv* 5,600 120
SPS Transaction Services* 1,900 99
The Bisys Group* 7,600 161
TOTAL FINANCIAL SERVICES 509
FOOD, BEVERAGE & TOBACCO--1.7%
Cott 4,900 65
John B. Sanfilippo & Son 6,100 55
TOTAL FOOD, BEVERAGE & TOBACCO 120
HOUSEHOLD PRODUCTS--3.0%
Coleman* 4,000 140
Recoton* 4,350 71
TOTAL HOUSEHOLD PRODUCTS 211
INSURANCE--2.8%
Capital Guaranty 3,200 49
Partnerre Holdings 3,200 70
Vesta Insurance Group 2,800 74
TOTAL INSURANCE 193
MARINE TRANSPORTATION--1.0%
Royal Carribean Cruises 2,800 $ 73
MEASURING DEVICES--0.7%
Quickturn Design Systems* 5,700 51
MEDICAL PRODUCTS & SERVICES--11.5%
American Healthcorp* 8,000 61
Cerner* 1,300 53
HBO 3,500 119
Healthsource* 3,500 124
Quorum Health Group* 8,000 152
Target Therapeutics* 4,400 129
Vencor* 3,500 160
TOTAL MEDICAL PRODUCTS & SERVICES 798
METALWORKING MACHINERY & EQUIPMENT--3.2%
Greenfield Industries 4,600 111
Shaw Group* 9,000 110
TOTAL METALWORKING MACHINERY
& EQUIPMENT 221
MISCELLANEOUS BUSINESS SERVICES--3.3%
Keane* 4,000 89
Landmark Graphics* 6,000 141
TOTAL MISCELLANEOUS BUSINESS SERVICES 230
PETROLEUM & FUEL PRODUCTS--3.1%
Benton Oil And Gas* 17,000 123
Coho Energy Resources* 17,000 90
TOTAL PETROLEUM & FUEL PRODUCTS 213
PRINTING & PUBLISHING--0.9%
Thomas Nelson 3,300 61
RAILROADS--1.1%
Johnstown America Industries* 2,900 76
RETAIL--4.4%
Department 56* 1,500 59
Gander Mountain Incorporation 5,900 75
Orchard Suppply Hardware Stores* 5,500 51
West Marine* 5,300 119
TOTAL RETAIL 304
RETAIL - EATING PLACES--3.4%
Buffets* 3,700 58
Fresh Choice* 4,300 86
Hometown Buffet 9,000 90
TOTAL RETAIL-EATING PLACES 234
SEMI-CONDUCTORS/INSTRUMENTS--1.1%
Chipcom* 1,500 80
SERVICES - PREPACKAGED SOFTWARE--6.8%
Network Peripherals* 13,100 $185
Peoplesoft* 2,900 140
Platinum Software* 4,000 49
Powersoft* 1,900 102
TOTAL SERVICES-PREPACKAGED SOFTWARE 476
SPECIALTY CONSTRUCTION--0.5%
Insituform Mid-America Class A 3,900 37
SPECIALTY MACHINERY--2.5%
York International 4,200 175
TELEPHONES & TELECOMMUNICATION--5.4%
A+ Communications* 4,800 63
American Paging* 3,800 33
Compania De Telef De Chile ADR 1,100 97
International Cabletel* 5,100 163
Nextel Communications Class A* 1,000 21
TOTAL TELEPHONES & TELECOMMUNICATION 377
TRUCKING--0.9%
Fritz Companies* 1,800 64
TOTAL COMMON STOCKS (Cost $5,186) 5,430
PREFERRED STOCKS--0.7%
SERVICES - PREPACKAGED SOFTWARE--0.7%
Network Imaging Pfd 2,300 48
TOTAL PREFERRED STOCKS (Cost $53) 48
REPURCHASE AGREEMENTS--17.8%
J.P. Morgan, 4.594%, dated 09/30/94,
matures 10/03/94, repurchase price
$680,821 (collateralized by a U.S.
Treasury Interest Coupon Note, par
value $3,683,531, maturing 02/15/15,
market value $694,126) 680
Merrill Lynch 4.652%, dated
09/30/94, matures 10/03/94,
repurchase price $556,721
(collateralized by a U.S. Treasury
Note, par value $574,856, interest
rate 4.25%, maturing 01/31/95,
market value $567,746) 557
TOTAL REPURCHASE AGREEMENTS
(Cost $1,237) 1,237
TOTAL INVESTMENTS--96.5% (Cost $6,476) $6,715
* Non-income producing security
(A) Variable rate security with Demand Features--the rate reported in the
Schedule of Investments is the rate in effect as of September 30, 1994. The
date shown is the longer of the reset date or demand date.
ADR--American Depository Receipt
TECHNOLOGY FUND
DESCRIPTION SHARES VALUE (000)
COMMON STOCKS--91.3%
COMMUNICATIONS EQUIPMENT--21.3%
Broadband Technologies* 6,600 $ 117
Cascade Communications* 500 24
DSC Communications* 9,100 258
General DataComm Industries* 5,400 153
General Instrument* 7,400 211
Newbridge Networks* 4,300 138
Northern Telecom 3,600 125
Qualcomm* 5,500 139
Tellabs* 5,500 234
TOTAL COMMUNICATIONS EQUIPMENT 1,399
COMPUTERS & SERVICES--15.4%
Adaptec* 4,100 78
C-Cube Microsystems* 300 6
Chipcom* 2,000 107
Cisco Systems* 5,900 162
Compaq Computer* 7,400 241
Convex Computer* 18,200 146
Pinnacle Micro* 4,000 52
S3* 11,000 140
Silicon Graphics* 3,000 77
TOTAL COMPUTERS & SERVICES 1,009
SEMI-CONDUCTORS/INSTRUMENTS--44.5%
Applied Materials* 3,400 159
Dataware Technologies* 3,100 41
Fourth Shift* 12,300 77
FSI International* 4,100 94
FTP Software* 5,400 129
GaSonics International* 1,700 30
Informix* 12,100 334
Intel 1,300 80
Lam Research* 3,200 129
LSI Logic* 3,600 135
Megatest* 2,000 36
Micron Technology 2,700 93
Network Peripherals* 10,400 147
Novellus Systems* 1,800 85
Oracle Systems* 6,200 267
Parametric Technology* 5,500 183
ParcPlace Systems* 3,400 72
Peoplesoft* 1,400 68
Platinum Software* 4,600 $ 56
Powersoft* 3,700 199
Quickturn Design Systems* 9,100 82
Softdesk* 1,000 18
Solectron* 3,700 98
Sonic Solution* 2,700 32
Symantec* 10,100 151
Synopsys* 2,700 122
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 2,917
SERVICES - PREPACKAGED SOFTWARE--10.1%
Business Objects S.A.(ADR)* 450 13
CFI Proservices* 7,300 108
Legent* 4,800 127
Microsoft* 4,500 252
Novell* 10,900 161
TOTAL SERVICES-PREPACKAGED SOFTWARE 661
TOTAL COMMON STOCKS (Cost $5,298) 5,986
PREFERRED STOCKS--4.9%
COMMUNICATIONS EQUIPMENT--4.1%
Nokia ADR 4,600 270
SERVICES - COMPUTER INTEGRATED SYSTEMS
DESIGN--0.8%
Network Imaging, Series A 2,400 50
TOTAL PREFERRED STOCKS (Cost $277) 320
REPURCHASE AGREEMENTS--3.9%
Merrill Lynch 4.562%, dated
09/30/94, matures 10/03/94,
repurchase price $257,957
(collateralized by a U.S. Treasury
Note, total par value $262,122,
interest rate 4.25%, matures
01/31/95, market value $263,068) 258
TOTAL REPURCHASE AGREEMENTS (Cost $258) 258
TOTAL INVESTMENTS--100.1%
(Cost $5,833) 6,564
OTHER ASSETS AND LIABILITIES--(0.1%)
Other assets and liabilities, net (10)
NET ASSETS
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
580,310 outstanding shares $5,628
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 5,513
outstanding shares 53
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 160
outstanding shares 2
Accumulated net investment loss (3)
Accumulated net realized gain on investments 143
Net unrealized appreciation of investments 731
TOTAL NET ASSETS:--100.0% $6,554
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $11.19
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS A $11.19
MAXIMUM SALES CHARGE OF 4.50% (1) .53
OFFERING PRICE PER SHARE--RETAIL CLASS A $11.72
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $11.17
* Non-income producing security
ADR--American Depository Receipt
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
INTERNATIONAL FUND
DESCRIPTION SHARES VALUE (000)
FOREIGN STOCKS--83.1%
ARGENTINA--2.0%
Argentina Telecommunications
ADR 4,000 $ 267
Banco Frances Rio Plata ADR* 2,300 69
Cementera Argentina* 46,901 376
IRSA "B"* 23,400 78
Quilmes Industrial 7,000 164
TOTAL ARGENTINA 954
CANADA--0.8%
Archer Resources* 8,200 108
Chauvco Resources* 4,700 58
Euro-Nevada Mining 3,000 92
Franco-Nevada Mining 2,000 130
TOTAL CANADA 388
CHILE--0.3%
Banco O'Higgins ADR* 6,500 133
COLUMBIA--0.5%
Banco Ganadero ADR* 2,000 52
Cementos Paz Del Rio GDR* 3,800 95
Corporacion Financiera Valle
GDS 4,000 88
TOTAL COLUMBIA 235
FINLAND--2.2%
Nokia 9,000 1,045
FRANCE--0.4%
Cie Bancaire 1,200 113
Lafarge Coppee 1,200 94
TOTAL FRANCE 207
GERMANY--2.2%
Bayer 775 175
Mannesmann 1,350 336
Veba 1,720 570
TOTAL GERMANY 1,081
HONG KONG--9.8%
Cheung Kong Holdings 57,000 277
Citic Pacific 176,000 544
First Pacific 916,000 670
Hong Kong Aircraft Engineering 40,800 189
Hong Kong Land Holdings 50,000 124
Hong Kong Telecommunications 307,400 615
Hopewell Holdings 203,000 190
HSBC Holdings 18,200 203
Hutchison Whampoa 60,000 283
Johnson Electric Holdings 20,000 56
Sun Hung Kai Properties 68,000 $ 506
Swire Pacific "A" 11,000 86
Television Broadcasts 111,000 516
Wharf Holdings 104,000 419
Wheelock 30,000 66
TOTAL HONG KONG 4,744
INDIA--0.8%
I.T.C. ADR* 12,000 156
Reliance Industries GDR 9,000 216
TOTAL INDIA 372
ISRAEL--0.1%
ECI Telecommunications 3,600 63
ITALY--3.7%
Assicurazioni Generali 8,910 228
Fiat* 84,000 359
Instituto Mobiliare 22,000 152
Mediobanca 10,600 95
Montedison* 216,000 189
Olivetti Group* 220,000 295
Stet-Soc Fin Telefonica ADR 80,000 248
Telecom Italia 85,000 240
TOTAL ITALY 1,806
JAPAN--28.6%
Alpine Electronics 6,000 126
Alps Electric* 8,000 104
Amway Japan ADR 3,000 48
Bridgestone 30,000 470
Canon 17,000 299
Dai Nippon Printing 12,000 217
Daiei 33,000 533
Daini Denden 106 926
Daiwa Securities 31,000 454
Fanuc 4,000 187
Hirose Electric 4,000 250
Hitachi 18,000 174
Honda Motor 9,000 150
Ito Yokado 13,000 694
Jusco 24,000 519
KOA 8,000 129
Komatsu 57,000 519
Kurita Water Industries 3,000 80
Kyocera 6,000 429
Marui 9,000 156
Matsushita Electric 21,000 335
Minebea 38,000 320
Misawa Homes 10,000 95
Mitsubishi Bank 5,000 124
Mitsubishi Electric 17,000 $ 120
Mitsubishi Heavy Industries 30,000 233
Mitsumi Electric 9,000 119
Mr. Max 2,800 76
Murata Manufacturing 11,000 425
NEC 64,000 769
Nippon Telegraph & Telephone 24 213
Nippondenso 4,000 81
Nissan Motors 27,000 221
Nomura Securities 28,000 580
Senshukai 7,000 229
Sharp 42,000 746
Sony 12,000 698
Sumitomo Chemical 34,000 193
Sumitomo Electric 8,000 118
Suzuki Motor 27,000 327
Takara Standard 10,000 121
Tokyo Electronics 9,000 287
Toppan Printing 5,000 73
Toshiba 50,000 376
Toyo Communications Equipment 3,000 94
Toyota Motor 19,000 389
TOTAL JAPAN 13,826
KOREA--1.6%
Korea Fund 13,000 340
Samsung Electric New GDS* 174 12
Samsung Electric Old GDS* 6,200 411
TOTAL KOREA 763
MALAYSIA--6.3%
Aokam Perdana 21,000 184
Aokam Perdana "A"* 8,000 69
Arab-Malaysian Merchant Bank* 58,000 633
Genting 11,000 99
Leader Universal Holdings 55,000 315
Malayan Banking 38,000 254
Malaysian Helicopter 34,400 107
Resort World 94,000 594
Sime Darby Malaysia 66,000 191
Technology Resources* 86,000 352
Telekom Malaysia 30,000 235
TOTAL MALAYSIA 3,033
MEXICO--9.5%
Apasco 10,000 97
Bufete Industrial ADR 4,500 185
Cemex "A" 33,750 303
Cifra 117,000 345
Empresas ICA Sociedad
Controladora ADR 6,000 194
Grupo Carso ADR* 18,600 $ 423
Grupo Financiero Banamex "C" 56,000 389
Grupo Financiero Inbursa "C"* 25,000 107
Grupo Industrial Durango ADR* 1,900 45
Grupo Iusacell ADS* 1,610 48
Grupo Posadas "A"* 177,000 198
Grupo Sidek ADR* 60,000 540
Grupo Situr ADR "B"* 36,000 124
Grupo Synkro ADR* 100,000 163
Grupo Televisa GDR 6,800 394
Grupo Tribasa ADR* 1,900 70
Kimberly Clark "A" 11,000 230
San Luis 6,000 67
Servicios Financieros Quadrum
ADR* 7,700 125
Tolmex 38,000 578
TOTAL MEXICO 4,625
NETHERLANDS--0.3%
Polygram 3,700 160
NORWAY--0.6%
Petroleum Geo-Services ADR* 16,100 312
PERU--0.3%
Banco Wiese* 6,800 165
PHILIPPINES--0.6%
San Miguel "B" 60,000 286
SINGAPORE--3.2%
Cerebos Pacific 55,000 299
City Developments 28,600 155
DBS Land 100,000 313
Singapore Press "F" 5,000 88
Straits Steamship Land 108,000 356
United Overseas Bank "F" 33,200 334
TOTAL SINGAPORE 1,545
SWEDEN--3.3%
Asea "B" 6,800 481
Autoliv* 3,000 90
Electrolux "B" 2,900 137
Ericsson Telephone ADR 17,000 914
TOTAL SWEDEN 1,622
SWITZERLAND--1.8%
Brown Boveri & Cie Bearer 520 448
Roche Holdings 60 270
Union Bank of Switzerland Bearer 180 172
TOTAL SWITZERLAND 890
TAIWAN--0.2%
Taiwan Fund 3,000 $ 92
THAILAND--1.8%
Advanced Info Service "F" 12,000 191
Advanced Info Service Rights* 24,000 371
Land and House "F" 16,000 318
TOTAL THAILAND 880
UNITED KINGDOM--2.0%
Barclays Bank 14,000 126
Next* 66,400 250
Reuters Holdings 49,000 367
Takare 20,000 66
Vodafone Group 51,000 158
TOTAL UNITED KINGDOM 967
VENEZUELA--0.2%
Industrias Mavesa ADS 11,000 73
TOTAL FOREIGN STOCKS
(Cost $38,958) 40,267
REPURCHASE AGREEMENT--18.3%
Merrill Lynch 4.5625%, dated
09/30/94, matures 10/03/94,
repurchase price $8,854,000
(collateralized by a U.S. Treasury
Note, total par value $21,145,000,
interest rate 4.25%, maturity date
01/31/95, total market value:
$21,072,250) 8,854
TOTAL REPURCHASE AGREEMENT
(Cost $8,854) 8,854
TOTAL INVESTMENTS--101.4%
(Cost $47,812) 49,121
OTHER ASSETS AND LIABILITIES--(1.4%)
Other assets and liabilities, net (672)
NET ASSETS
Portfolio shares Institutional Class ($.0001 par
value--2 billion authorized) based on 4,694,760
outstanding shares 47,350
Portfolio shares Retail Class A ($.0001 par
value--2 billion authorized) based on 45,395
outstanding shares 457
Portfolio shares Retail Class B ($.0001 par
value--2 billion authorized) based on 2,128
outstanding shares 22
Accumulated net investment loss (415)
Accumulated net
realized loss on
investments and
foreign currency
transactions $ (234)
Net unrealized
depreciation on
forward foreign
currency contracts,
foreign currency and
translation of other
assets and
liabilities in
foreign currency (40)
Net unrealized
appreciation of
investments 1,309
TOTAL NET
ASSETS:--100.0% $48,449
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 10.22
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE --RETAIL CLASS A $ 10.21
MAXIMUM SALES CHARGE
OF 4.50% (1) .48
OFFERING PRICE PER
SHARE -- RETAIL CLASS A $ 10.69
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 10.21
* Non-income producing security
ADR--American Depository Receipt
ADS--American Depository Shares
GDR--Global Depository Receipt
GDS--Global Depository Shares
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.75%.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
Statements of Assets and Liabilities (000)----SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
EQUITY DIVERSIFIED
INCOME GROWTH
FUND FUND
ASSETS:
Investment securities, at value
(cost $19,189, and $31,932, respectively) $ 19,122 $ 32,215
RECEIVABLES:
Accrued income 113 --
Securities sold -- 302
Capital shares sold 973 1,591
Other assets 55 133
TOTAL ASSETS 20,263 34,241
LIABILITIES:
PAYABLES:
Securities purchased 891 454
Other liabilities 30 --
TOTAL LIABILITIES 921 454
NET ASSETS:
Portfolio Shares--Institutional Class
(No par value--unlimited authorization)
based on 1,768,328 & 3,502,094 outstanding shares,
respectively 17,862 34,419
Portfolio Shares--Retail Class A
(No par value--unlimited authorization)
based on 187,297 & 208,967 outstanding shares,
respectively 1,982 2,133
Portfolio Shares--Retail Class B
(No par value--unlimited authorization)
based on 101 & 1,370 outstanding shares,
respectively 1 13
Undistributed net investment income 30 20
Accumulated net realized loss on investments (466) (3,081)
Net unrealized appreciation (depreciation) of investments (67) 283
TOTAL NET ASSETS $ 19,342 $ 33,787
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.89 $ 9.10
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.89 $ 9.09
MAXIMUM SALES CHARGE OF 4.50% (1)
AND 4.50% (1), RESPECTIVELY .47 .43
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.36 $ 9.52
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (2) $ 9.88 $ 9.09
</TABLE>
(1) The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.50% and 4.50%, respectively.
(2) Retail Class B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF ASSETS AND LIABILITIES (000)----SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
COLORADO
INTERMEDIATE EMERGING
TAX FREE GROWTH
FUND FUND
ASSETS:
Investment securities, at value
(cost $8,173, and $6,476 respectively) $ 8,141 $6,715
RECEIVABLES:
Accrued income 129 --
Securities sold -- 33
Capital shares sold 458 351
Other assets 27 23
TOTAL ASSETS 8,755 7,122
LIABILITIES:
PAYABLES:
Securities purchased 745 136
Accrued expenses 33 28
Other liabilities 3 --
TOTAL LIABILITIES 781 164
NET ASSETS:
Portfolio Shares--Institutional Class
($.0001 par value--2 billion authorized) based
on 716,975 & 648,578 outstanding shares, respectively 7,306 6,548
Portfolio Shares--Retail Class A
($.0001 par value--2 billion authorized) based
on 68,223 & 8,552 outstanding shares, respectively 697 86
Portfolio Shares--Retail Class B
($.001 par value--2 billion authorized) based
on 0 & 1,730 outstanding shares, respectively -- 18
Undistributed net investment income 2 1
Accumulated net realized gain on investments 1 66
Net unrealized appreciation (depreciation) of investments (32) 239
TOTAL NET ASSETS $ 7,974 $6,958
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $ 10.16 $10.56
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE--RETAIL CLASS A $ 10.15 $10.57
MAXIMUM SALES CHARGE OF 3.00% (1) AND 4.50% (1), RESPECTIVELY .31 .50
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.46 $11.07
NET ASSET VALUE AND OFFERING PRICE PER SHARE--RETAIL CLASS B (2) -- $10.55
</TABLE>
(1)The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 3.00% and 4.50%, respectively.
(2)Retail Class B has a contingent deferred sales charge. For a description
of a possible redemption charge, see the notes to the financial statements.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS (000)
For the period ended September 30, 1994
<TABLE>
<CAPTION>
LIMITED INTERMEDIATE FIXED MANAGED
TERM TERM INCOME INCOME
INCOME FUND INCOME FUND FUND FUND(1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 4,695 $ 3,355 $ 3,740 $ 3,690
Dividends -- -- -- --
TOTAL INVESTMENT INCOME 4,695 3,355 3,740 3,690
EXPENSES:
Investment advisory fees 673 445 338 371
Distribution fees--Retail Class A 120 64 62 3
Administrator fees 192 127 125 114
Transfer agent fees 22 21 16 16
Amortization of organizational costs 2 2 -- 8
Custodian fees 6 5 5 5
Directors' fees 3 2 2 1
Registration fees 18 19 22 19
Professional fees 25 20 21 42
Printing 16 14 10 44
Other 9 5 7 8
TOTAL EXPENSES 1,086 724 608 631
LESS: EXPENSES WAIVED OR ABSORBED (509) (329) (213) (276)
TOTAL NET EXPENSES 577 395 395 355
INVESTMENT INCOME--NET 4,118 2,960 3,345 3,335
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS--NET:
Net realized gain (loss) on investments 29 (863) (188) (1,434)
Net change in unrealized appreciation (depreciation) of
investments (2,149) (2,753) (5,201) (261)
NET GAIN (LOSS) ON INVESTMENTS (2,120) (3,616) (5,389) (1,695)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,998 $ (656) $(2,044) $ 1,640
</TABLE>
(table continued)
<TABLE>
<CAPTION>
MINNESOTA
LIMITED COLORADO INSURED
INTERMEDIATE MORTGAGE TERM TAX INTERMEDIATE INTERMEDIATE INTERMEDIATE
GOVERNMENT SECURITIES FREE INCOME TAX FREE TAX FREE TAX FREE
BOND FUND FUND FUND(1) FUND FUND(2) FUND(3)
<S> <C> <C> <C> <C> <C>
$354 $ 1,977 $ 525 $ 171 $ 48 $ 323
-- -- -- -- -- --
354 1,977 525 171 48 323
37 225 106 19 6 43
7 29 -- 5 1 1
50 64 63 50 24 29
13 17 15 11 8 9
-- 2 8 -- 3 3
2 10 2 1 -- 2
-- 1 -- -- -- --
4 5 16 2 1 8
1 9 16 1 -- 3
-- 6 17 -- 1 1
-- 2 7 -- -- --
114 370 250 89 44 99
(85) (173) (121) (70) (38) (58)
29 197 129 19 6 41
325 1,780 396 152 42 282
(78) (62) (13) (38) 1 (12)
(344) (1,966) (115) (178) (32) (252)
(422) (2,028) (128) (216) (31) (264)
$(97) $ (248) $ 268 $ (64) $ 11 $ 18
</TABLE>
(1) Period from December 1, 1993 to September 30, 1994 for Managed Income Fund
and Limited Term Tax Free Fund. On April 28, 1994, the Board of Directors
of FAMF approved a change in FAMF's fiscal year end from November 30 to
September 30, effective September 30, 1994.
(2) The Colorado Intermediate Tax Free Fund commenced operations on April 4,
1994.
(3) The Minnesota Insured Intermediate Tax Free Fund commenced operations
February 28, 1994.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS (000)
For the period ended September 30, 1994
<TABLE>
<CAPTION>
ASSET EQUITY EQUITY
ALLOCATION BALANCED INDEX INCOME
FUND FUND FUND FUND(1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 608 $ 3,364 $ 96 $ 904
Dividends 1,166 1,787 4,235 223
Less: Foreign taxes withheld -- -- -- --
Total investment income 1,774 5,151 4,331 1,127
EXPENSES:
Investment advisory fees 374 888 1,076 141
Distribution fees--Retail Class A 52 126 135 1
Administrator fees 107 254 308 64
Transfer agent fees 20 26 26 17
Amortization of organizational costs 2 3 4 8
Custodian fees 36 15 24 2
Directors' fees 2 4 5 1
Registration fees 12 36 29 16
Professional fees 15 39 43 14
Printing 9 23 28 19
Other 3 12 12 9
TOTAL EXPENSES 632 1,426 1,690 292
LESS: EXPENSES WAIVED OR ABSORBED (231) (467) (1,152) (124)
TOTAL NET EXPENSES 401 959 538 168
INVESTMENT INCOME (LOSS)--NET 1,373 4,192 3,793 959
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS--NET:
Net realized gain (loss) on investments 1,042 2,435 1,237 (442)
Net realized loss on forward foreign currency contracts
and foreign currency transactions -- -- -- --
Net change in unrealized appreciation (depreciation) of investments (1,588) (3,010) 56 334
Net change in unrealized depreciation on forward foreign currency contracts,
foreign currency and translation of other assets and liabilities in foreign
currency -- -- -- --
NET GAIN (LOSS) ON INVESTMENTS (546) (575) 1,293 (108)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 827 $ 3,617 $ 5,086 $ 851
</TABLE>
(table continued)
<TABLE>
<CAPTION>
DIVERSIFIED SPECIAL REGIONAL EMERGING
GROWTH STOCK EQUITY EQUITY GROWTH TECHNOLOGY INTERNATIONAL
FUND(1) FUND FUND FUND FUND(2) FUND(2) FUND(2)
<S> <C> <C> <C> <C> <C> <C>
$43 $ 454 $ 982 $ 595 $ 15 $ 8 $ 95
466 3,297 1,885 684 5 2 159
-- -- -- -- -- -- (20)
509 3,751 2,867 1,279 20 10 234
169 926 738 579 14 11 188
1 125 92 74 -- -- --
63 273 212 166 25 25 31
18 24 23 20 8 8 10
8 -- -- 4 3 3 3
2 14 8 8 1 -- 38
1 3 3 3 -- -- --
29 32 34 28 2 2 17
21 40 32 27 1 1 7
19 20 19 15 -- -- 5
6 12 8 6 -- -- 9
337 1,469 1,169 930 54 50 308
(132) (442) (326) (262) (38) (37) (45)
205 1,027 843 668 16 13 263
304 2,724 2,024 611 4 (3) (29)
(3,037) 7,831 8,668 2,221 66 143 (177)
-- -- -- -- -- -- (443)
1,902 319 7,538 2,652 239 731 1,309
-- -- -- -- -- -- (40)
(1,135) 8,150 16,206 4,873 305 874 649
$(831) $10,874 $18,230 $5,484 $309 $871 $ 620
</TABLE>
(1) Period from December 1, 1993 to September 30, 1994 for Equity Income Fund
and Diversified Growth Fund. On April 28, 1994, the Board of Directors of
FAMF approved a change in FAMF's fiscal year end from November 30 to
September 30, effective September 30, 1994.
(2) The Emerging Growth, Technology and International Funds commenced
operations April 4, 1994.
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
LIMITED TERM TERM INCOME INCOME MANAGED
INCOME FUND FUND FUND INCOME FUND
10/1/93 12/14/92(4) 10/1/93 12/14/92(4) 10/1/93 10/1/92 12/1/93 11/17/92(6)
to to to to to to to to
9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94(5)11/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income--net $ 4,118 $ 3,597 $ 2,960 $ 2,254 $ 3,345 $ 2,131 $ 3,335 $ 3,789
Net realized gain (loss) on investments 29 (6) (863) 1,071 (188) 550 (1,434) (446)
Net change in unrealized appreciation
(depreciation) of investments (2,149) 730 (2,753) 594 (5,201) 1,723 (261) (1,393)
Net increase in net assets resulting from
operations 1,998 4,321 (656) 3,919 (2,044) 4,404 1,640 1,950
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (2,182) -- (1,900) -- (2,150) -- (519) --
Retail class A (1,862) (3,665) (1,064) (2,249) (1,197) (2,123) (2,859) (3,738)
Retail class B -- -- -- -- -- -- -- --
Net realized gain on investments:
Institutional class -- -- -- -- -- -- -- --
Retail class A -- -- -- (497) (51) (489) -- --
Retail class B -- -- -- -- -- -- -- --
Distributions in excess of realized
capital gains:
Institutional class -- -- -- -- -- -- -- --
Retail class A -- -- (685) -- (523) -- -- --
Retail class B -- -- -- -- -- -- -- --
TOTAL DISTRIBUTIONS (4,044) (3,665) (3,649) (2,746) (3,921) (2,612) (3,378) (3,738)
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Transfer from retail class A 82,491 -- 59,843 -- 44,936 -- 48,679 --
Proceeds from sales 16,209 -- 25,019 -- 58,825 -- 3,367 --
Reinvestment of distributions 2,151 -- 1,829 -- 1,749 -- 364 --
Payments for redemptions (29,445) -- (15,273) -- (12,069) -- (4,270) --
Increase in net assets from Institutional
class transactions 71,406 -- 71,418 -- 93,441 -- 48,140 --
Retail class A:
Proceeds from sales 28,721 179,835 4,929 85,136 12,649 58,147 8,648 87,518
Reinvestment of distributions 1,645 3,519 1,744 2,740 1,635 2,303 2,256 2,847
Payments for redemptions (59,260) (62,210) (9,581) (21,758) (12,211) (14,286) (31,310) (14,929)
Transfer to institutional class (82,491) -- (59,843) -- (44,936) -- (48,679) --
Increase (decrease) in net assets from
Retail class A transactions (111,385) 121,144 (62,751) 66,118 (42,863) 46,164 (69,085) 75,436
Retail class B:
Proceeds from sales 1 -- -- -- 116 -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Increase (decrease) in net assets from
Retail class B transactions 1 -- -- -- 116 -- -- --
Increase (decrease) in net assets from
capital share transactions (39,978) 121,144 8,667 66,118 50,694 46,164 (20,945) 75,436
Total increase (decrease) in net assets (42,024) 121,800 4,362 67,291 44,729 47,956 (22,683) 73,648
NET ASSETS AT BEGINNING OF PERIOD 121,800 -- 67,291 -- 53,601 5,645 73,748 100
NET ASSETS AT END OF PERIOD (2)(3) $ 79,776 $121,800 $ 71,653 $ 67,291 $ 98,330 $ 53,601 $51,065 $ 73,748
(1)Capital share transactions:
Institutional class:
Transfer from retail class A 8,255 -- 5,960 -- 4,120 -- 4,793 --
Proceeds from sales 1,636 -- 2,597 -- 5,555 -- 352 --
Reinvestment of distributions 218 -- 188 -- 165 -- 38 --
Payments for redemptions (2,975) -- (1,581) -- (1,140) -- (447) --
Total Institutional class transactions 7,134 -- 7,164 -- 8,700 -- 4,736 --
Retail class A:
Proceeds from sales 2,860 17,966 506 8,466 1,128 5,279 892 8,749
Reinvestment of distributions 164 352 174 270 147 207 234 288
Payments for redemptions (5,916) (6,206) (967) (2,153) (1,092) (1,282) (3,245) (1,504)
Transfer to institutional class (8,255) -- (5,960) -- (4,120) -- (4,793) --
Total Retail class A transactions (11,147) 12,112 (6,247) 6,583 (3,937) 4,204 (6,912) 7,533
Retail class B:
Proceeds from sales -- -- -- -- 11 -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Total Retail class B transactions -- -- -- -- 11 -- -- --
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS (4,013) 12,112 917 6,583 4,774 4,204 (2,176) 7,533
</TABLE>
(table continued)
<TABLE>
<CAPTION>
MINNESOTA
COLORADO INSURED
INTERMEDIATE INTERMEDIATE INTERMEDIATE
GOVERNMENT BOND MORTGAGE LIMITED TERM INTERMEDIATE TAX FREE TAX FREE
FUND SECURITIES FUND TAX FREE INCOME FUND TAX FREE FUND FUND FUND
10/1/93 10/1/92 10/1/93 12/14/92(4) 12/1/93 2/19/93(8) 10/1/93 10/1/92 4/4/94(7) 2/28/94(9)
to to to to to to to to to to
9/30/94 9/30/93 9/30/94 9/30/93 9/30/94(5) 11/30/93 9/30/94 9/30/93 9/30/94 9/30/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$325 $ 75 $ 1,780 $ 1,015 $ 396 $ 276 $ 152 $ 71 $ 42 $ 282
(78) 18 (62) 10 (13) (2) (38) 18 1 (12)
(344) 2 (1,966) 729 (115) 36 (178) 51 (32) (252)
(97) 95 (248) 1,754 268 310 (64) 140 11 18
(217) -- (1,208) -- (93) -- (78) -- (30) (254)
(109) (75) (572) (1,015) (315) (264) (74) (71) (10) (28)
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- (10) -- -- -- -- -- -- --
-- (38) -- -- -- -- -- (4) -- --
-- -- -- -- -- -- -- -- -- --
(18) -- -- -- -- -- (21) -- -- --
-- -- -- -- -- -- -- -- -- --
(344) (113) (1,790) (1,015) (408) (264) (173) (75) (40) (282)
2,156 -- 32,357 -- 15,896 -- 2,109 -- -- --
27,456 -- 4,386 -- 1,082 -- 6,147 -- 7,465 21,192
81 -- 1,182 -- 45 -- 40 -- 10 41
(1,614) -- (8,219) -- (582) -- (2,027) -- (169) (709)
28,079 -- 29,706 -- 16,441 -- 6,269 -- 7,306 20,524
1,156 4,030 3,906 30,412 3,189 20,877 802 2,478 691 1,606
117 65 582 1,014 152 84 83 62 6 28
(718) (950) (1,640) (1,650) (6,128) (1,677) (481) (361) -- (114)
(2,156) -- (32,357) -- (15,896) -- (2,109) -- -- --
(1,601) 3,145 (29,509) 29,776 (18,683) 19,284 (1,705) 2,179 697 1,520
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
26,478 3,145 197 29,776 (2,242) 19,284 4,564 2,179 8,003 22,044
26,037 3,127 (1,841) 30,515 (2,382) 19,330 4,327 2,244 7,974 21,780
3,716 589 30,515 -- 19,330 -- 2,969 725 -- --
$29,753 $3,716 $ 28,674 $ 30,515 $ 16,948 $19,330 $ 7,296 $ 2,969 $7,974 $21,780
229 -- 3,201 -- 1,589 -- 199 -- -- --
3,034 -- 438 -- 108 -- 592 -- 732 2,183
9 -- 120 -- 4 -- 4 -- 1 4
(177) -- (833) -- (58) -- (195) -- (16) (73)
3,094 -- 2,926 -- 1,643 -- 600 -- 717 2,114
123 426 379 3,012 319 2,087 74 231 68 166
13 7 57 99 15 8 8 5 -- 3
(78) (100) (159) (160) (612) (167) (45) (33) -- (12)
(229) -- (3,201) -- (1,589) -- (199) -- -- --
(171) 333 (2,924) 2,951 (1,867) 1,928 (162) 203 68 157
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
2,924 333 2 2,951 (224) 1,928 438 203 785 2,271
</TABLE>
(2) Including undistributed (distributions in excess of) net investment income
(000) of $72 and $(68) for Limited Term Income, $0 and $5 for Intermediate
Term Income, $6 and $8 for Fixed Income, and $2 and $0 for Colorado
Intermediate Tax Free Fund at September 30, 1994 and September 30, 1993,
respectively.
(3) Including undistributed net investment income (000) of $8 and $50 for
Managed Income, $0 and $11 for Limited Term Tax Free Fund at September 30,
1994 and November 30, 1993, respectively.
(4) The Limited Term Income, Intermediate Term Income, and Mortgage Securities
Fund commenced operations on December 14, 1992.
(5) On April 28, 1994, the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994.
(6) The Managed Income Fund commenced operations on November 17, 1992.
(7) The Colorado Intermediate Tax Free Fund commenced operations on April 4,
1994.
(8) The Limited Term Tax Free Fund commenced operations on February 19, 1993.
(9) The Minnesota Insured Intermediate Tax Free Fund commenced operations on
February 28, 1994.
<TABLE>
<CAPTION>
ASSET EQUITY EQUITY
ALLOCATION FUND BALANCED FUND INDEX FUND INCOME FUND
10/1/93 12/14/92(4) 10/1/93 12/14/92(4) 10/1/93 12/14/92(4) 12/1/93 12/18/92(6)
to to to to to to to to
9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94(5) 11/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income (loss)--net $ 1,373 $ 1,044 $ 4,192 $ 2,227 $ 3,793 $ 2,422 $ 959 $ 1,468
Net realized gain (loss) on investments 1,042 590 2,435 1,339 1,237 84 (442) (23)
Net realized loss on forward foreign currency
contracts and foreign currency transactions -- -- -- -- -- -- -- --
Net change in unrealized appreciation
(depreciation) of investments (1,588) 2,615 (3,010) 4,394 56 6,106 334 (401)
Net change in unrealized depreciation on
forward foreign currency contracts, foreign
currency and translation of other assets and
liabilities in foreign currency -- -- -- -- -- -- -- --
Net increase (decrease) in net assets
resulting from operations 827 4,249 3,617 7,960 5,086 8,612 851 1,044
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (991) -- (2,793) -- (2,885) -- (61) (1,457)
Retail class A (384) (1,032) (1,366) (2,236) (912) (2,380) (880) --
Retail class B -- -- -- -- -- -- -- --
Net realized gain on investments:
Institutional class -- -- -- -- -- -- -- --
Retail class A (713) -- (1,884) (181) (188) -- -- --
Retail class B -- -- -- -- -- -- -- --
Total distributions (2,088) (1,032) (6,043) (2,417) (3,985) (2,380) (941) (1,457)
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Transfer from retail class A 51,261 -- 109,870 -- 143,478 -- 6,302 --
Proceeds from sales 6,840 -- 28,604 -- 33,718 -- 12,340 --
Reinvestment of distributions 987 -- 2,773 -- 2,867 -- 20 --
Payments for redemptions (13,790) -- (18,873) -- (23,678) -- (800) --
Increase in net assets from Institutional
class transactions 45,298 -- 122,374 -- 156,385 -- 17,862 --
Retail class A:
Proceeds from sales 3,688 64,582 24,928 114,827 17,529 137,520 3,926 35,768
Reinvestment of distributions 1,097 1,032 3,244 2,416 1,100 2,380 737 1,278
Payments for redemptions (6,020) (12,438) (10,460) (11,561) (8,148) (6,175) (25,578) (7,847)
Transfer to institutional class (51,261) -- (109,870) -- 143,478) -- (6,302) --
Increase (decrease) in net assets from Retail
class A
transactions (52,496) 53,176 (92,158) 105,682 (132,997) 133,725 (27,217) 29,199
Retail class B:
Proceeds from sales 11 -- 274 -- 29 -- 1 --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Increase in net assets from Retail class B
transactions 11 -- 274 -- 29 -- 1 --
Increase (decrease) in net assets from capital
share transactions (7,187) 53,176 30,490 105,682 23,417 133,725 (9,354) 29,199
Total increase (decrease) in net assets (8,448) 56,393 28,064 111,225 24,518 139,957 (9,444) 28,786
NET ASSETS AT BEGINNING OF PERIOD 56,393 -- 111,225 -- 139,957 -- 28,786 --
NET ASSETS AT END OF PERIOD (2)(3) $47,945 $56,393 $139,289 $111,225 $164,475 $139,957 $ 19,342 $28,786
(1)Capital share transactions:
Institutional class:
Transfer from retail class A 5,136 -- 10,707 -- 14,112 -- 600 --
Proceeds from sales 658 -- 2,697 -- 3,201 -- 1,247 --
Reinvestment of distributions 95 -- 261 -- 271 -- 2 --
Payments for redemptions (1,341) -- (1,774) -- (2,248) -- (81) --
Total Institutional class transactions 4,548 -- 11,891 -- 15,336 -- 1,768 --
Retail class A:
Proceeds from sales 345 6,420 2,312 11,238 1,626 13,574 397 3,572
Reinvestment of distributions 103 100 303 231 102 230 75 129
Payments for redemptions (564) (1,200) (967) (1,107) (753) (596) (2,600) (784)
Transfer to institutional class (5,136) -- (10,707) -- (14,112) -- (600) --
Total Retail class A transactions (5,252) 5,320 (9,059) 10,362 (13,137) 13,208 (2,730) 2,917
Retail class B:
Proceeds from sales 1 -- 26 -- 3 -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Total Retail class B transactions 1 -- 26 -- 3 -- -- --
NET INCREASE (DECREASE) IN CAPITAL SHARES (703) 5,320 2,858 10,362 2,202 13,208 (962) 2,917
</TABLE>
<TABLE>
<CAPTION>
EMERGING
DIVERSIFIED SPECIAL REGIONAL GROWTH TECHNOLOGY INTERNATIONAL
GROWTH FUND STOCK FUND EQUITY FUND EQUITY FUND FUND FUND FUND
12/1/93 12/18/92(6) 10/1/93 10/1/92 10/1/93 10/1/92 10/1/93 12/14/92(4) 4/4/94(7) 4/4/94(7) 4/4/94(7)
to to to to to to to to to to to
9/30/94(5) 11/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/93 9/30/94 9/30/94 9/30/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 304 $ 343 $ 2,724 $ 1,737 $ 2,024 $ 1,127 $ 611 $ 212 $ 4 $ (3) $ (29)
(3,037) (44) 7,831 2,511 8,668 5,111 2,221 846 66 143 (177)
-- -- -- -- -- -- -- -- -- -- (443)
1,902 (1,619) 319 7,539 7,538 2,853 2,652 7,251 239 731 1,309
-- -- -- -- -- -- -- -- -- -- (40)
(831) (1,320) 10,874 11,787 18,230 9,091 5,484 8,309 309 871 620
(95) (291) (2,082) -- (1,518) -- (486) -- (3) -- --
(242) -- (608) (1,721) (490) (1,147) (112) (225) -- -- --
-- -- (2) -- (1) -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
-- -- (3,673) (101) (5,674) (373) (888) -- -- -- --
-- -- -- -- -- -- -- -- -- --
(337) (291) (6,365) (1,822) (7,683) (1,520) (1,486) (225) (3) -- --
2,393 -- 110,876 -- 88,018 -- 61,030 -- -- -- --
32,761 -- 52,481 -- 29,156 -- 27,827 -- 6,695 5,773 47,575
68 -- 1,908 -- 1,418 -- 471 -- 1 -- --
(803) -- (24,357) -- (7,305) -- (4,225) -- (148) (145) (225)
34,419 -- 140,908 -- 111,287 -- 85,103 -- 6,548 5,628 47,350
2,689 37,488 20,003 151,544 18,076 76,349 23,298 51,829 86 53 459
229 276 4,166 1,758 5,968 1,502 997 225 -- -- --
(31,086) (5,069) (29,532) (32,725) (3,615) (7,109) (6,404) (1,711) -- -- (2)
(2,393) -- (110,876) -- (88,018) -- (61,030) -- -- -- --
(30,561) 32,695 (116,239) 120,577 (67,589) 70,742 (43,139) 50,343 86 53 457
13 -- 350 -- 364 -- 186 -- 18 2 22
-- -- 2 -- 1 -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
13 -- 352 -- 365 -- 186 -- 18 2 22
3,871 32,695 25,021 120,577 44,063 70,742 42,150 50,343 6,652 5,683 47,829
2,703 31,084 29,530 130,542 54,610 78,313 46,148 58,427 6,958 6,554 48,449
31,084 -- 134,186 3,644 81,899 3,586 58,427 -- -- -- --
$33,787 $ 31,084 $ 163,716 $134,186 $136,509 $ 81,899 $104,575 $ 58,427 $ 6,958 $ 6,554 $ 48,449
223 -- 7,556 -- 6,040 -- 5,673 -- -- -- --
3,361 -- 3,185 -- 1,778 -- 2,308 -- 664 595 4,717
7 -- 116 -- 85 -- 38 -- -- -- --
(89) -- (1,469) -- (457) -- (351) -- (15) (15) (22)
3,502 -- 9,388 -- 7,446 -- 7,668 -- 649 580 4,695
295 3,835 1,225 10,168 1,122 5,287 1,910 5,017 9 6 45
25 30 260 113 383 100 84 20 -- -- --
(3,198) (555) (1,808) (2,152) (224) (469) (539) (153) -- -- --
(223) -- (7,556) -- (6,040) -- (5,673) -- -- -- --
(3,101) 3,310 (7,879) 8,129 (4,759) 4,918 (4,218) 4,884 9 6 45
1 -- 21 -- 21 -- 15 -- 2 -- 2
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
1 -- 21 -- 21 -- 15 -- 2 -- 2
402 3,310 1,531 8,129 2,708 4,918 3,465 4,884 660 586 4,742
</TABLE>
(2) Including undistributed (distributions in excess of) net investment income
(000) of $10 and $12 for Asset Allocation, $24 and $(9) for Balanced, $38
and $42 for Equity Index, $52 and $20 for Stock, $0 and $(15) for Special
Equity, $0 and ($13) for Regional Equity, $1 and $0 for Emerging Growth and
accumulated net investment (loss) of ($3) and $0 for Technology Fund,
($415) and $0 for International, at September 30, 1994 and September 30,
1993, respectively.
(3) Including undistributed net investment income (000) of $20 and $52 for
Diversified Growth, $30 and $12 for Equity Income at September 30, 1994 and
November 30, 1993, respectively.
(4) The Asset Allocation, Balanced, Equity Index and Regional Equity Fund
commenced operations on December 14, 1992.
(5) On April 28, 1994, the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994.
(6) The Diversified Growth and Equity Income Fund commenced operations on
December 18, 1992.
(7) The Emerging Growth, International, and Technology Fund commenced
operations on April 4, 1994.
FINANCIAL HIGHLIGHTS
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS NET ASSET
VALUE NET GAINS OR FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM END OF END OF
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIMITED TERM INCOME
INSTITUTIONAL CLASS
1994(1) $10.02 $0.29 $(0.17) $(0.29) $ -- $ 9.85 1.24%+ $ 70,266
RETAIL CLASS A
1994 $10.06 $0.44 $(0.22) $(0.43) -- $ 9.85 2.21% $ 9,509
1993(2) 10.00 0.29 0.07 (0.30) $ -- 10.06 3.61%+ 121,800
RETAIL CLASS B
1994(3) $ 9.86 $0.04 $ 0.01 $(0.07) $ -- $ 9.84 0.51%+ $ 1
INTERMEDIATE TERM INCOME
INSTITUTIONAL CLASS
1994(1) $10.01 $0.31 $(0.46) $(0.31) $ -- $ 9.55 (1.48%)+ $ 68,445
RETAIL CLASS A
1994 $10.22 $0.46 $(0.56) $(0.46) $(0.11)* $ 9.55 (1.05%) $ 3,208
1993(2) 10.00 0.41 0.29 (0.41) (0.07) 10.22 7.21%+ 67,291
FIXED INCOME
INSTITUTIONAL CLASS
1994(1) $11.11 $0.38 $(0.74) $(0.38) $ -- $10.37 (3.23%)+ $ 90,187
RETAIL CLASS A
1994 $11.38 $0.57 $(0.89) $(0.57) $(0.12)** $10.37 (2.92%) $ 8,028
1993 11.13 0.62 0.36 (0.61) (0.12) 11.38 9.20% 53,601
1992 10.59 0.66 0.60 (0.66) (0.06) 11.13 12.34% 5,645
1991(4) 10.01 0.65 0.58 (0.65) -- 10.59 12.48%+ 6,045
1990(5) 10.44 0.74 (0.26) (0.74) (0.17) 10.01 5.14% 2,209
1989(5) 10.13 0.74 0.31 (0.74) -- 10.44 10.93% 555
1988(5)(6) 10.03 0.62 0.13 (0.65) -- 10.13 8.07%+ 240
RETAIL CLASS B
1994(3) $10.54 $0.08 $(0.17) $(0.10) $ -- $10.35 (0.88%)+ $ 115
MANAGED INCOME
INSTITUTIONAL CLASS
1994(7) $ 9.57 $0.11 $(0.06) $(0.11) $ -- $ 9.51 0.50%+ $ 45,061
RETAIL CLASS A
1994(8) $ 9.78 $0.52 $(0.26) $(0.52) $ -- $ 9.52 2.71%+ $ 6,004
1993(9)(10) 10.00 0.61 (0.23) (0.60) $ -- 9.78 3.88%+ 73,748
INTERMEDIATE GOVERNMENT BOND
INSTITUTIONAL CLASS
1994(1) $ 9.41 $0.27 $(0.43) $(0.27) $ -- $ 8.98 (1.77%)+ $ 27,776
RETAIL CLASS A
1994 $ 9.52 $0.41 $(0.51) $(0.39) $(0.05)* $ 8.98 (1.13%) $ 1,977
1993 10.18 0.44 0.02 (0.44) (0.68) 9.52 4.99% 3,716
1992 10.25 0.60 0.28 (0.60) (0.35) 10.18 8.88% 589
1991(4) 10.01 0.65 0.24 (0.65) -- 10.25 9.13%+ 1,756
1990(5) 10.05 0.75 (0.04) (0.75) -- 10.01 7.41% 1,573
1989(5) 9.99 0.74 0.06 (0.74) -- 10.05 8.35% 1,501
1988(5)(6) 10.03 0.58 (0.01) (0.61) -- 9.99 6.18%+ 375
MORTGAGE SECURITIES
INSTITUTIONAL CLASS
1994(1) $10.30 $0.38 $(0.59) $(0.38) $ -- $ 9.71 (2.15%)+ $ 28,418
RETAIL CLASS A
1994 $10.34 $0.56 $(0.63) $(0.56) $ -- $ 9.71 (0.79%) $ 256
1993(2) 10.00 0.42 0.34 (0.42) -- 10.34 7.76%+ 30,515
LIMITED TERM TAX FREE INCOME
INSTITUTIONAL CLASS
1994(7) $ 9.98 $0.06 $(0.03) $(0.06) $ -- $ 9.95 0.27%+ $ 16,349
RETAIL CLASS A
1994(8) $10.03 $0.22 $(0.07) $(0.23) $ -- $ 9.95 1.50%+ $ 599
1993(9)(11) 10.00 0.18 0.02 (0.17) $ -- 10.03 2.02 19,330
INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1994(1) $10.89 $0.29 $(0.61) $(0.29) $ -- $10.28 (2.91%)+ $6,168
RETAIL CLASS A
1994 $10.92 $0.44 $(0.57) $(0.44) $(0.07)* $10.28 (1.25%) $1,128
1993 10.56 0.47 0.42 (0.47) (0.06) 10.92 8.66% 2,969
1992 10.34 0.53 0.22 (0.53) -- 10.56 7.23% 725
1991(4) 10.04 0.50 0.31 (0.50) (0.01) 10.34 8.15%+ 637
1990(5) 10.08 0.56 (0.04) (0.56) -- 10.04 5.31% 537
1989(5) 10.19 0.56 (0.11) (0.56) -- 10.08 4.57% 491
1988(5)(6) 10.03 0.47 0.16 (0.47) -- 10.19 6.73%+ 425
COLORADO INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1994(12) $10.00 $0.22 $ 0.16 $(0.22) $ -- $10.16 3.76%+ $ 7,281
RETAIL CLASS A
1994(12) $10.00 $0.21 $ 0.16 $(0.22) $ -- $10.15 3.66%+ $ 693
MINNESOTA INSURED INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1994(13) $10.00 $0.25 $(0.41) $(0.25) $ -- $ 9.59 (1.58%)+ $ 20,272
RETAIL CLASS A
1994(13) $10.00 $0.25 $(0.42) $(0.25) $ -- $ 9.58 (1.68%)+ $ 1,508
ASSET ALLOCATION
INSTITUTIONAL CLASS
1994(1) $10.68 $0.20 $(0.30) $(0.20) $ -- $10.38 (0.90%)+ $ 47,227
RETAIL CLASS A
1994 $10.60 $0.27 $(0.08) $(0.26) $(0.14) $10.39 1.81% $ 707
1993(2) 10.00 0.19 0.60 (0.19) -- 10.60 8.01%+ 56,393
RETAIL CLASS B
1994(3) $10.40 $0.05 $(0.03) $(0.05) $ -- $10.37 0.19% $ 11
BALANCED
INSTITUTIONAL CLASS
1994(1) $10.86 $0.25 $(0.32) $(0.25) $ -- $10.54 (0.64%)+ $125,285
RETAIL CLASS A
1994 $10.73 $0.34 $(0.02) $(0.34) $(0.17) $10.54 3.02% $ 13,734
1993(2) 10.00 0.28 0.75 (0.28) (0.02) 10.73 10.39%+ 111,225
RETAIL CLASS B
1994(3) $10.66 $0.06 $(0.12) $(0.07) $ -- $10.53 (0.55%)+ $ 270
EQUITY INDEX
INSTITUTIONAL CLASS
1994(1) $10.85 $0.20 $(0.18) $(0.20) $ -- $10.67 0.18%+ $163,688
RETAIL CLASS A
1994 $10.60 $0.25 $ 0.09 $(0.25) $(0.01) $10.68 3.25% $ 758
1993(2) 10.00 0.20 0.60 (0.20) -- 10.60 8.02%+ 139,957
RETAIL CLASS B
1994(3) $10.68 $0.01 $ 0.04 $(0.07) $ -- $10.66 0.48%+ $ 29
EQUITY INCOME
INSTITUTIONAL CLASS
1994(7) $ 9.90 $0.07 $(0.03) $(0.05) $ -- $ 9.89 0.45%+ $ 17,489
RETAIL CLASS A
1994(8) $ 9.87 $0.41 $ -- $(0.39) $ -- $ 9.89 4.22%+ $ 1,852
1993(9)(10) 10.00 0.57 (0.14) (0.56) -- 9.87 4.44%+ 28,786
RETAIL CLASS B
1994(3) $ 9.87 $0.04 $ 0.02 $(0.05) $ -- $ 9.88 0.57%+ $ 1
DIVERSIFIED GROWTH
INSTITUTIONAL CLASS
1994(7) $ 8.92 $0.03 $ 0.18 $(0.03) $ -- $ 9.10 2.36%+ $ 31,875
RETAIL CLASS A
1994(8) $ 9.39 $0.10 $(0.29) $(0.11) $ -- $ 9.09 (2.07%)+ $ 1,900
1993(9)(10) 10.00 0.11 (0.63) (0.09) -- 9.39 (5.18%)+ 31,084
RETAIL CLASS B
1994(3) $8.87 $0.01 $0.23 $(0.02) $ -- $9.09 2.75%+ $ 12
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE
EXPENSES TO INCOME TO NET ASSETS
AVERAGE AVERAGE (EXCLUDING PORTFOLIO
NET ASSETS NET ASSETS WAIVERS) TURNOVER RATE
0.60% 4.40% 1.03% 48%
0.60% 4.17% 1.23% 48%
0.60 3.61 1.27 104
1.60% 3.50% 2.03% 48%
0.58% 4.81% 1.07% 177%
0.69% 2.48% 1.24% 177%
0.70 4.90 1.29 163
0.61% 5.53% 0.92% 142%
0.68% 3.83% 1.06% 142%
0.70 5.65 1.14 91
0.99 6.12 2.68 180
0.99 6.85 4.11 176
1.07 7.49 5.46 144
1.22 7.26 22.44 157
0.96 7.18 20.70 93
1.70% 4.89% 1.92% 142%
0.60% 6.21% 0.81% 21%
0.68% 6.31% 1.06% 21%
0.65 6.69 1.07 39
0.36% 5.32% 1.45% 74%
0.53% 4.49% 2.14% 74%
0.71 4.00 4.73 182
0.99 6.03 14.14 101
0.99 6.99 6.76 100
1.08 7.57 5.55 40
1.19 7.49 9.65 72
0.95 6.78 17.20 0
0.56% 5.79% 1.07% 35%
0.70% 5.12% 1.30% 35%
0.70 5.24 1.42 29
0.60% 3.26% 1.28% 57%
0.90% 2.47% 1.53% 57%
0.81 2.30 1.76 22
0.45% 4.48% 2.20% 52%
0.59% 4.13% 2.78% 52%
0.71 4.31 5.09 27
0.99 4.83 16.09 23
0.99 5.35 15.48 15
1.08 5.58 13.85 4
1.09 5.57 19.55 4
0.84 5.87 13.60 0
0.69% 4.51% 4.71% 4%
0.69% 4.51% 4.96% 4%
0.67% 4.57% 1.59% 22%
0.67% 4.57% 1.84% 22%
0.75% 2.91% 1.12% 32%
0.75% 2.01% 1.29% 32%
0.75 2.40 1.34 31
1.75% 1.94% 2.12% 32%
0.75% 3.51% 1.05% 98%
0.77% 2.63% 1.24% 98%
0.75 3.31 1.29 77
1.75% 2.80% 2.05% 98%
0.35% 2.59% 1.03% 11%
0.35% 2.23% 1.23% 11%
0.35 2.52 1.30 1
1.35% 1.68% 2.03% 11%
0.75% 5.61% 1.14% 108%
0.88% 4.88% 1.39% 108%
0.75 6.09 1.36 68
1.75% 4.39% 2.14% 108%
0.75% 2.37% 1.08% 101%
0.90% 1.15% 1.33% 101%
0.78 1.26 1.25 5
1.75% 1.20% 2.08% 101%
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
* Represents distributions in excess of net realized gains.
** (0.11) consists of distributions in excess of net realized gains.
(1) Institutional Class shares have been offered since February 4, 1994. All
ratios for the period have been annualized.
(2) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(3) Retail Class B shares have been offered since August 15, 1994. All ratios
for the period have been annualized.
(4) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(5) For the period ended October 31.
(6) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(7) Institutional Class shares have been offered since August 2, 1994. All
ratios for the period have been annualized.
(8) On April 28, 1994 the Board of Directors of FAMF approved a change in the
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994. All ratios for the period have been annualized.
(9) For the period ended November 30.
(10) Commenced operations on December 18, 1992. All ratios for the period have
been annualized.
(11) Commenced operations on February 19, 1993. All ratios for the period have
been annualized.
(12) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(13) Commenced operations on February 28, 1994. All ratios for the period have
been annualized.
Financial Highlights (concluded)
For the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET NET UNREALIZED DIVIDENDS NET ASSET
VALUE INVESTMENT GAINS OR FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM END OF END OF
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK
INSTITUTIONAL CLASS
1994(1) $16.47 $0.25 $ 0.03 $(0.25) $ -- $16.50 1.70%+ $154,949
RETAIL CLASS A
1994 $16.00 $0.31 $ 1.00 $(0.30) $(0.50) $16.51 8.35% $ 8,421
1993 14.04 0.22 1.99 (0.23) (0.02) 16.00 15.82% 134,186
1992 13.62 0.24 0.81 (0.29) (0.34) 14.04 7.88% 3,644
1991(2) 10.64 0.28 2.95 (0.22) (0.03) 13.62 30.49%+ 2,386
1990(3) 12.09 0.25 (1.17) (0.25) (0.28) 10.64 (8.22%) 1,161
1989(3) 10.35 0.25 1.70 (0.20) (0.01) 12.09 20.33% 323
1988(3)(4) 10.03 0.27 0.35 (0.30) -- 10.35 6.40%+ 206
RETAIL CLASS B
1994(5) $16.65 $0.03 $(0.10) $(0.09) $ -- $16.49 (0.43%)+ $ 346
SPECIAL EQUITY
INSTITUTIONAL CLASS
1994(1) $16.34 $0.22 $ 0.96 $(0.22) $ -- $17.30 7.31%+ $128,806
RETAIL CLASS A
1994 $15.81 $0.28 $ 2.52 $(0.28) $(1.03) $17.30 18.70% $ 7,333
1993 13.61 0.23 2.32 (0.25) (0.10) 15.81 18.91% 81,899
1992 12.98 0.21 1.61 (0.27) (0.92) 13.61 15.17% 3,586
1991(2) 10.33 0.30 2.61 (0.26) -- 12.98 28.38%+ 3,423
1990(3) 12.96 0.47 (2.03) (0.46) (0.61) 10.33 (13.24%) 2,761
1989(3) 11.55 0.47 1.39 (0.41) (0.04) 12.96 17.41% 2,000
1988(3)(4) 10.03 0.34 1.57 (0.39) -- 11.55 19.56%+ 578
RETAIL CLASS B
1994(5) $16.51 $0.01 $ 0.85 $(0.08) $ -- $17.29 5.22%+ $ 370
REGIONAL EQUITY
INSTITUTIONAL CLASS
1994(1) $12.41 $0.07 $ 0.11 $(0.07) $ -- $12.52 1.46%+ $ 96,045
RETAIL CLASS A
1994 $11.96 $ 0.08 $ 0.71 $(0.07) $(0.16) $12.52 6.76% $ 8,345
1993(6) 10.00 0.05 1.96 (0.05) -- 11.96 20.17%+ 58,427
RETAIL CLASS B
1994(5) $12.19 $ -- $ 0.33 $(0.02) $ -- $12.50 2.73%+ $ 185
EMERGING GROWTH
INSTITUTIONAL CLASS
1994(7) $10.00 $ 0.01 $ 0.56 $(0.01) $ -- $10.56 5.68%+ $ 6,849
RETAIL CLASS A
1994(7) $10.00 $ 0.01 $ 0.57 $(0.01) $ -- $10.57 5.88%+ $ 91
RETAIL CLASS B
1994(5) $ 9.89 $(0.01) $ 0.67 $ -- $ -- $10.55 6.67%+ $ 18
TECHNOLOGY
INSTITUTIONAL CLASS
1994(7) $10.00 $(0.01) $ 1.19 $ -- $ -- $11.19 11.90%+ $ 6,491
RETAIL CLASS A
1994(7) $10.00 $(0.01) $ 1.20 $ -- $ -- $11.19 11.90%+ $ 61
RETAIL CLASS B
1994(5) $ 9.85 $(0.02) $ 1.34 $ -- $ -- $11.17 13.40%+ $ 2
INTERNATIONAL
INSTITUTIONAL CLASS
1994(7) $10.00 $(0.01) $ 0.23 $ -- $ -- $10.22 2.20%+ $47,963
RETAIL CLASS A
1994(8) $ 9.98 $(0.01) $ 0.24 $ -- $ -- $10.21 2.30%+ $ 464
RETAIL CLASS B
1994(5) $10.23 $(0.01) $(0.01) $ -- $ -- $10.21 (0.20%)+ $ 22
(table continued)
RATIO OF NET RATIO OF
INVESTMENT EXPENSES TO
RATIO OF INCOME AVERAGE
EXPENSES TO (LOSS) NET ASSETS
AVERAGE TO AVERAGE (EXCLUDING PORTFOLIO
NET ASSETS NET ASSETS WAIVERS) TURNOVER RATE
0.75% 2.28% 1.01% 65%
0.76% 1.51% 1.20% 65%
0.75 1.94 1.28 48
1.45 1.75 4.46 39
1.45 2.47 7.42 76
1.45 2.24 9.47 41
1.24 2.26 36.39 74
1.02 2.67 28.60 80
1.75% 1.58% 2.01% 65%
0.79% 1.93% 1.03% 116%
0.81% 1.88% 1.23% 116%
0.81 2.07 1.31 104
1.50 1.61 4.18 146
1.50 2.60 5.13 116
1.50 4.09 4.21 113
1.38 4.07 8.68 102
1.20 4.02 15.60 51
1.68% 0.47% 2.03% 116%
0.80% 0.82% 1.05% 41%
0.82% 0.59% 1.25% 41%
0.80 0.59 1.30 28
1.80% (0.41)% 2.05% 41%
0.80% 0.23% 2.59% 19%
0.79% 0.23% 2.84% 19%
1.80% (0.85%) 3.59% 19%
0.80% (0.21%) 3.12% 43%
0.80% (0.21%) 3.37% 43%
1.80% (1.44%) 4.12% 43%
1.75% (0.19%) 2.05% 16%
1.75% (0.26%) 2.30% 16%
2.75% (0.71%) 3.05% 16%
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
(1) Institutional Class shares have been offered since February 4, 1994. All
ratios for the period have been annualized.
(2) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(3) For the period ended October 31.
(4) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(5) Retail Class B shares have been offered since August 15, 1994. All ratios
for the period have been annualized.
(6) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(7) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(8) Retail Class A shares have been offered since April 7, 1994. All ratios for
the period have been annualized.
NOTES TO FINANCIAL STATEMENTS----SEPTEMBER 30, 1994
1 ORGANIZATION
First American Limited Term Income Fund, Intermediate Term Income Fund, Fixed
Income Fund, Intermediate Government Bond Fund (formerly Government Bond
Fund), Mortgage Securities Fund, Intermediate Tax Free Fund (formerly
Municipal Bond Fund), Colorado Intermediate Tax Free Fund, Minnesota Insured
Intermediate Tax Free Fund, Asset Allocation Fund, Balanced Fund, Equity
Index Fund, Stock Fund, Special Equity Fund, Regional Equity Fund, Emerging
Growth Fund, Technology Fund, International Fund, and Limited Volatility
Stock Fund are funds offered by First American Investment Funds, Inc. (FAIF).
The First American Managed Income Fund (formerly Boulevard Managed Income
Fund), Limited Term Tax Free Income Fund (formerly Boulevard Managed
Municipal Fund), Equity Income Fund (formerly Boulevard Strategic Balance
Fund) and Diversified Growth Fund (formerly Boulevard Blue-Chip Growth Fund)
are funds offered by First American Mutual Funds (FAMF), formerly The
Boulevard Funds. FAIF and FAMF (collectively the "Funds") are registered
under the Investment Company Act of 1940, as amended, as open end, management
investment companies. The Limited Volatility Stock Fund was not in operation
at September 30, 1994. The Funds' articles of incorporation permit the Board
of Directors to create additional funds in the future.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
Security Valuation -- Investment securities of the Funds which are listed on
a securities exchange for which market quotations are available are valued by
an independent pricing service at the last quoted sales price for such
securities on each business day. If there is no such reported sale, these
securities and unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price. Debt obligations
with sixty days or less remaining until maturity may be valued at their
amortized cost. Under this valuation method, purchase discounts and premiums
are accreted and amortized ratably to maturity and are included in interest
income. Foreign securities are valued based upon quotation from the primary
market in which they are traded. When market quotations are not readily
available, securities are valued at fair value as determined in good faith by
procedures established by the Board of Directors.
Security Transactions and Investment Income -- The Funds record security
transactions on the trade date, the date the securities are purchased or
sold. Dividend income is recorded on the ex-dividend date. Interest income,
including amortization of bond premium and discount, is recorded on the
accrual basis. Security gains and losses are determined on the basis of
identified cost, which is the same basis used for Federal income tax
purposes.
Distributions to Shareholders -- Limited Term Income Fund, Intermediate Term
Income Fund, Fixed Income Fund, Managed Income Fund, Intermediate Government
Bond Fund, Mortgage Securities Fund, Limited Term Tax Free Income Fund,
Intermediate Tax Free Fund, Colorado Intermediate Tax Free Fund, Minnesota
Insured Intermediate Tax Free Fund, Asset Allocation Fund, Balanced Fund, and
Equity Income Fund declare and pay income dividends monthly. Equity Index
Fund, Diversified Growth Fund, Stock Fund, Special Equity Fund, Regional
Equity Fund, Emerging Growth Fund and Technology Fund declare and pay income
dividends quarterly. International Fund declares and pays dividends annually.
Any net realized capital gains on sales of securities for a fund are
distributed to shareholders at least annually.
Federal Taxes -- It is each Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required. For Federal
income tax purposes required distributions related to realized gains from
security transactions are computed as of October 31st.
During the current period, the Funds adopted Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gains and Return of Capital Distributions by Investment Companies."
Accordingly, the timing and character of dividend distributions and the
differences in accounting for income and realized gains (losses) may differ
for financial statement and federal income tax purposes. There was no effect
on net assets as a result of adopting this Statement. On the Statement of Net
Assets, as a result of the differences in the characterization of certain
foreign currency realized and unrealized gains (losses), reclassification
adjustments have been made to the International Fund to increase the
accumulated net investment loss by approximately $386,000 with an equivalent
offset to the accumulated net realized loss on investments and foreign
currency transactions. Except for the International Fund, the implementation
of the Statement had no material effect on paid in capital or other
components of net assets. Dividends distributed from net realized gains from
security transactions are in excess of net realized gains during the fiscal
year for the FAIF Intermediate Term Income Fund, Fixed Income Fund,
Intermediate Government Bond Fund, and Intermediate Tax Free Fund on a
generally accepted accounting principles basis primarily due to timing
differences.
Repurchase Agreements -- The Funds may enter into repurchase agreements with
member banks of the Federal Deposit Insurance Company or registered broker
dealers whom the Adviser or Sub-Adviser deems creditworthy under guidelines
approved by the Board of Directors, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The
repurchase price would generally equal the price paid by the Fund plus
interest negotiated on the basis of current short-term rates.
Securities pledged as collateral for repurchase agreements are held by the
custodian bank until the respective agreements mature. Provisions of the
repurchase agreements ensure that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default of
the counterparty. If the counterparty defaults and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities which have been purchased by a Fund on a forward commitment or
when-issued basis can take place up to a month or more after the transaction
date. During this period, such securities are subject to market fluctuations
and the portfolio maintains, in a segregated account with its custodian,
assets with a market value equal to or greater than the amount of its
purchase commitments.
Foreign Currency Translation -- The books and records of the International
Fund are maintained in U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The International Fund does not isolate that portion of gains and losses on
investments in equity securities which is due to changes in the foreign
exchange rates from that which is due to change in market prices of equity
securities.
The International Fund reports certain foreign currency related transactions
as components of realized gains for financial reporting purposes, whereas
such components are treated as ordinary income for Federal income tax
purposes.
Forward Foreign Currency Contracts -- The International Fund enters into
forward foreign currency contracts as hedges against either specific
transactions or fund positions. The aggregate principal amount of the
contracts are not recorded as the International Fund intends to settle the
contracts prior to delivery. All commitments are "marked-to-market" daily at
the applicable foreign exchange rate and any resulting unrealized gains or
losses are recorded currently. The International Fund realizes gains or
losses at the time the forward contracts are extinguished. Unrealized gains
or losses on outstanding positions in forward foreign currency contracts held
at the close of the year will be recognized as ordinary income or loss for
Federal income tax purposes.
Expenses -- Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses are prorated to the
Funds on the basis of relative net asset value. Class specific expenses, such
as the 12b-1 fees, are borne by that class. Income, other expenses and
realized and unrealized gains and losses of a Fund are allocated to the
respective class on the basis of the relative net asset value each day.
3 INVESTMENT SECURITY TRANSACTIONS
During the period ended September 30, 1994, purchases of securities and
proceeds from sales of securities, other than temporary investments in
short-term securities, were as follows (000):
U.S. GOVERNMENT OTHER INVESTMENT
SECURITIES SECURITIES
PURCHASES SALES PURCHASES SALES
Limited Term
Income Fund $ 1,970 $ 5,959 $40,719 $81,543
Intermediate Term
Income Fund 94,780 100,805 16,453 6,341
Fixed Income Fund 118,363 70,252 9,669 12,182
Managed Income
Fund -- 1 12,405 17,895
Intermediate
Government
Bond Fund 27,827 5,125 -- 12
Mortgage
Securities Fund 6,339 9,079 3,359 4,317
Limited Term Tax
Free Income Fund -- -- 9,930 11,273
Intermediate Tax
Free Fund -- -- 5,760 1,720
Colorado
Intermediate
Tax Free Fund -- -- 7,315 98
Minnesota Insured
Intermediate Tax
Free Fund -- -- 22,267 2,102
Asset Allocation
Fund 13,712 5,043 2,194 27,662
Balanced Fund 90,103 83,101 51,430 33,802
Equity Index Fund -- -- 38,452 16,989
Equity Income
Fund -- 2,363 22,042 28,496
Diversified
Growth Fund -- -- 26,922 26,807
Stock Fund -- -- 91,366 82,646
Special Equity
Fund -- -- 102,628 94,738
Regional Equity
Fund -- -- 54,860 28,030
Emerging Growth
Fund -- -- 5,875 703
Technology Fund -- -- 6,942 1,510
International
Fund -- -- 43,758 4,623
At September 30, 1994 the total cost of securities for Federal Income Tax
purposes, was not materially different from amounts reported for financial
reporting purposes. The aggregate gross unrealized appreciation and
depreciation for securities held by the Funds at September 30, 1994 is as
follows (000):
AGGREGATE AGGREGATE
GROSS GROSS
APPRECIATION DEPRECIATION NET
Limited Term Income Fund $ 12 $ (1,431) $(1,419)
Intermediate Term Income Fund 18 (2,177) (2,159)
Fixed Income Fund 27 (3,209) (3,182)
Managed Income Fund 1 (1,655) (1,654)
Intermediate Government Bond
Fund -- (324) (324)
Mortgage Securities Fund 36 (1,273) (1,237)
Limited Term Tax Free Income Fund 5 (85) (80)
Intermediate Tax Free Fund 14 (112) (98)
Colorado Intermediate Tax Free
Fund 13 (45) (32)
Minnesota Insured Intermediate
Tax Free Fund 10 (262) (252)
Asset Allocation Fund 3,310 (2,283) 1,027
Balanced Fund 7,366 (5,982) 1,385
Equity Index Fund 16,732 (10,570) 6,162
Equity Income Fund 273 (340) (67)
Diversified Growth Fund 1,355 (1,072) 283
Stock Fund 13,079 (5,018) 8,061
Special Equity Fund 12,713 (2,269) 10,444
Regional Equity Fund 15,988 (6,085) 9,903
Emerging Growth Fund 587 (348) 239
Technology Fund 888 (157) 731
International Fund 2,620 (1,311) 1,309
At September 30, 1994 the following funds have capital loss carryforwards:
EXPIRATION
AMOUNT DATE
Intermediate Term Income Fund $ 406,191 2003
Fixed Income Fund 121,979 2003
Managed Income Fund 436,996 2001
1,433,968 2002
Intermediate Government Bond Fund 76,938 2003
Mortgage Securities Fund 62,215 2003
Limited Term Tax Free Income Fund 1,667 2001
13,855 2002
Intermediate Tax Free Fund 41,294 2003
Minnesota Insured Intermediate Tax
Free Fund 11,686 2003
Equity Income Fund 21,770 2001
359,517 2002
Diversified Growth Fund 43,652 2001
3,037,582 2002
International Fund 109,607 2002
4 FEES AND EXPENSES
Pursuant to an investment advisory agreement (the Agreement), First Bank
National Association (the Adviser) manages each Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Agreement
requires each Fund to pay the Adviser a monthly fee based upon average daily
net assets. The fee for all funds, other than the International Fund, is
equal to an annual rate of .70% of the average daily net assets. The fee for
the International Fund is equal to an annual rate of 1.25% of average daily
net assets. Through a separate contractual agreement, First Trust National
Association, an affiliate of the Adviser, serves as the Funds' custodian.
Marvin & Palmer Associates, Inc., serves as Sub-Adviser to the International
Fund pursuant to a Sub-Advisory Agreement with the Adviser.
SEI Financial Services Company (SFS) and SEI Financial Management
Corporation, (SFM) serve as distributor and administrator of the Funds,
respectively. Under the distribution plan, each of the Funds pay SFS a
monthly distribution fee of .25% of each Fund's average daily net assets of
the Retail class A shares and 1.00% of the Retail class B shares, which may
be used by SFS to provide compensation for sales support and distribution
activities. SFM provides administrative services, including certain
accounting, legal and shareholder services, at an annual rate of .20% of each
Fund's average daily net assets, with a minimum annual fee of $50,000 per
Fund.
Pursuant to prior agreements which terminated April 30, 1994 (June 9, 1994
for the transfer agent agreement), Federated Securities Corp., Federated
Administrative Services and Federated Services Company served as the Funds'
distributor, administrator and transfer agent, respectively for FAMF.
A Contingent Deferred Sales Charge (CDSL) is imposed on redemptions made in
the Retail Class B. The CDSL varies depending on the number of years from
time of payment for the purchase of Class B shares until the redemption of
such shares.
CONTINGENT DEFERRED SALES
CHARGE
YEAR SINCE AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CHARGE
FIRST 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
For the year ended September 30, 1994, sales charges retained by SFS for
distributing the Funds' shares were approximately $97,000.
In addition to the investment advisory and management fees, custodian fees,
distribution fees, administrator and transfer agent fees, each fund is
responsible for paying most other operating expenses including organization
costs, fees and expenses of outside directors, registration fees, printing
shareholder reports, legal, auditing, insurance and other miscellaneous
expenses.
During the period ended September 30, 1994, the Adviser and other parties
waived a portion of their contractual fees in order to assist the Funds in
maintaining a competitive expense ratio. Expenses were waived as follows
(000):
WAIVER OF
INVESTMENT WAIVER OF WAIVER OF WAIVER OF
ADVISORY ADMINISTRATOR DISTRIBUTION CUSTODIAN
FEES FEES FEES (1) FEES
Limited Term Income
Fund $370 $17 $120 $ 1
Intermediate Term
Income Fund 251 13 64 1
Fixed Income Fund 137 14 62 1
Managed Income Fund 239 34 2 --
Intermediate
Government Bond Fund 40 38 7 1
Mortgage Securities
Fund 134 6 29 4
Limited Term Tax Free
Income Fund 91 30 -- --
Intermediate Tax Free
Fund 24 40 5 --
Colorado Intermediate
Tax Free Fund 2 36 1 --
Minnesota Insured
Intermediate Tax
Free Fund 25 32 2 --
Asset Allocation Fund 159 10 51 10
Balanced Fund 329 16 118 4
Equity Index Fund 968 39 135 10
Equity Income Fund 94 28 1 --
Diversified Growth
Fund 97 36 1 --
Stock Fund 296 21 120 4
Special Equity Fund 222 14 88 1
Regional Equity Fund 180 11 68 2
Emerging Growth Fund 10 28 -- --
Technology Fund 7 30 -- --
International Fund 40 5 -- --
(1) Retail class A
For the period ended September 30, 1994, legal fees and expenses were paid to a
law firm of which the secretary of the funds is a partner.
5 DEFERRED ORGANIZATIONAL COSTS
The Funds incurred organization expenses in connection with their start-up
and initial registration. These costs were allocated equally to each fund and
are being amortized over 60 months on a straight-line basis.
6 FORWARD FOREIGN CURRENCY CONTRACTS
The following forward foreign currency contracts were outstanding at
September 30, 1994.
INTERNATIONAL FUND
NET
CONTRACTS TO IN UNREALIZED
DELIVER/ EXCHANGE APPRECIATION/
SETTLEMENT RECEIVE FOR (DEPRECIATION)
DATES (000) (000) (000)
Foreign Currency
Sales 10/6/94 CH 600 $ 462 $ (4)
10/6/94 DM 750 485 2
10/6/94 FF 710 134 --
10/6/94 IT 1,557,330 987 (11)
10/6/94 NG 160 92 --
10/6/94 SK 11,050 1,443 (32)
10/6/94 UK 250 387 (7)
10/3/94-10/6/94 JY 735,936 7,448 14
$11,438 $(38)
Foreign Currency
Purchases 10/3/94 JY 71,514 $ 727 $ (4)
10/5/94 DM 159 103 (1)
$ 830 $ (5)
$(43)
CURRENCY LEGEND
CH Swiss Francs
DM German Marks
FF French Francs
IT Italian Lira
JY Japanese Yen
NG Netherland Guilders
SK Swedish Krona
UK British Pounds Sterling
7 PROPOSED FUND MERGER
The Board of Directors of the Funds have approved, subject to shareholder
approval, the acquisition of the FAMF Managed Income Fund by the FAIF Limited
Term Income Fund. The acquisition will be accounted for by the method of
accounting for tax free mergers of investment companies (sometimes referred
to as the pooling without restatement method). Under the proposed merger
agreement and plan of reorganization, Retail Class A and Institutional Class
shares of the FAMF Managed Income Fund will be exchanged for Retail Class A
and Institutional Class shares of the FAIF Limited Term Income Fund. If the
exchange were to have occurred as of September 30, 1994, one share of the
FAMF Managed Income Fund Retail Class A would have been exchanged for .9665
shares of the FAIF Limited Term Income Fund Retail Class A and one share of
the FAMF Managed Income Fund Institutional Class would have been exchanged
for .9655 shares of the FAIF Limited Term Income Fund Institutional Class.
In addition, under a proposed merger agreement and plan of reorganization,
subject to shareholder approval, FAMF Limited Term Tax Free Income Fund, FAMF
Equity Income Fund and FAMF Diversified Growth Fund, will each be merged into
a new FAIF fund identical to the existing FAMF fund.
8 CONCENTRATION OF CREDIT RISK
The Limited Term Tax Free Income Fund, Intermediate Tax Free Fund, Colorado
Intermediate Tax Free Fund, and Minnesota Insured Intermediate Tax Free Fund
invest in debt instruments of municipal issuers. Although these Funds
maintain a diversified portfolio, the issuers ability to meet their
obligations may be affected by economic developments in a specific state or
region.
The Limited Term Tax Free Income Fund, Intermediate Tax Free Fund, Colorado
Intermediate Tax Free Fund, and Minnesota Insured Intermediate Tax Free Fund
invest in securities which include revenue bonds, tax and revenue
anticipation notes, and general obligation bonds. At September 30, 1994, the
percentage of portfolio investments by each revenue source was as follows:
LIMITED COLORADO MINNESOTA
TERM INTERMEDIATE INTERMEDIATE INSURED
TAX FREE TAX FREE TAX FREE INTERMEDIATE
FUND FUND FUND TAX FREE FUND
Revenue Bonds:
Education Bonds 5% 7% 11% 4%
Health Care Bonds 8 17 1 14
Transportation
Bonds 11 4 4 5
Utility Bonds 26 16 3 7
Housing Bonds 5 5 4 27
Pollution Control
Bonds -- -- 2 5
Industrial Bonds 4 -- 2 --
Other 6 14 15 14
GENERAL
OBLIGATIONS 32 36 52 20
TAX AND REVENUE
ANTICIPATION
NOTES 3 1 6 4
100% 100% 100% 100%
The rating of long-term debt as a percentage of total value of investments at
September 30, 1994 is as follows:
LIMITED COLORADO MINNESOTA
TERM INTERMEDIATE INTERMEDIATE INSURED
TAX FREE TAX FREE TAX FREE INTERMEDIATE
FUND FUND FUND TAX FREE FUND
STANDARD & POORS
RATINGS:
AAA 34% 51% 45% 79%
AA 27 14 16 2
AA+ 6 3 -- --
AA- 4 12 4 2
A+ 7 5 4 9
A 7 5 11 --
A- 2 -- -- --
BBB+ 3 -- -- --
BBB 1 -- -- --
NR 9 10 20 8
100% 100% 100% 100%
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
First American Investment Funds, Inc.
First American Mutual Funds:
We have audited the accompanying statements of net assets (or the statements
of assets and liabilities, including the schedules of investments) as of
September 30, 1994, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the seventeen
funds constituting First American Investment Funds, Inc. and each of the four
funds constituting First American Mutual Funds for each of the periods
presented. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on
our audits. The statements of changes in net assets and the financial
highlights of each of the four funds constituting First American Mutual Funds
(formerly The Boulevard Funds) for the periods presented ended November 30,
1993 were audited by other auditors whose reports dated January 20, 1994
expressed unqualified opinions on this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financialstatements. Investment securities held in custody
are verified by examination, or by confirmation with the sub-custodian or
depository. As to securities purchased and sold but not received or
delivered, we request confirmations from brokers and where replies are not
received, we carry out other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the seventeen funds constituting First American
Investment Funds, Inc. and each of the four funds constituting First American
Mutual Funds as of September 30, 1994, and the results of their operations,
changes in their net assets and the financial highlights for the periods
stated in the first paragraph above, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 4, 1994
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
First American Investment Funds, Inc.:
We have audited the statements of assets and liabilities of Limited Term Tax
Free Income Fund, Equity Income Fund and Diversified Growth Fund (the Funds) as
of November 4, 1994. These financial statements are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of cash in bank by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the statements of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Limited
Term Tax Free Fund, Equity Income Fund and Diversified Growth Fund as of
November 4, 1994, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 14, 1994
FIRST AMERICAN INVESTMENT FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 4, 1994
<TABLE>
<CAPTION>
LIMITED TERM
TAX FREE INCOME EQUITY INCOME DIVERSIFIED GROWTH
FUND FUND FUND
<S> <C> <C> <C>
ASSETS:
Cash $200 $300 $300
NET ASSETS:
Portfolio shares of Institutional
Class ($.0001 par value -- 2 billion
authorized) based on 10, 10 and 10
outstanding shares of beneficial
interest $100 $100 $100
Portfolio shares of Retail Class A
($.0001 par value -- 2 billion
authorized) based on 10, 10 and 10
outstanding shares of beneficial
interest 100 100 100
Portfolio shares of Retail Class B
($.0001 par value -- 2 billion
authorized) based on 0, 10 and 10
outstanding shares of beneficial
interest 0 100 100
TOTAL NET ASSETS $200 $300 $300
NET ASSET VALUE PER SHARE --
INSTITUTIONAL CLASS $10.00 $10.00 $10.00
NET ASSET VALUE PER SHARE --
RETAIL CLASS A $10.00 $10.00 $10.00
NET ASSET VALUE PER SHARE --
RETAIL CLASS B $10.00 $10.00
</TABLE>
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS FIRST AMERICAN INVESTMENT FUNDS, INC.
NOVEMBER 4, 1994
(1) ORGANIZATION
First American Investment Funds, Inc. (FAIF) is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
FAIF presently consists of a series of eighteen funds which includes Limited
Term Tax Free Income Fund, Equity Income Fund and Diversified Growth Fund (the
Funds). The other funds in the series which are not being reported at this time
include Equity Index Fund, Regional Equity Fund, Special Equity Fund, Stock
Fund, Fixed Income Fund, Intermediate Government Bond Fund, Intermediate Term
Income Fund, Limited Term Income Fund, Mortgage Securities Fund, Asset
Allocation Fund, Balanced Fund, Intermediate Tax Free Fund, Colorado
Intermediate Tax Free Fund, Minnesota Insured Intermediate Tax Free Fund,
Technology Fund, International Fund and Limited Volatility Stock Fund. FAIF's
articles of incorporation permit the Board of Directors to create additional
funds in the future.
(2) PROPOSED FUND MERGER
The Board of Directors of the Funds has approved, subject to shareholder
approval, a proposed merger agreement and plan of reorgainization of the First
American Mutual Fund (FAMF). Under its terms, Limited Term Tax Free Income Fund,
Equity Income Fund and Diversified Growth Fund will each be merged into a new
FAIF fund identical to existing FAMF fund.
FIRST AMERICAN INVESTMENT FUNDS, INC.
SEMI-ANNUAL REPORT
MARCH 31, 1995
[LOGO] FIRST AMERICAN FUNDS
The power of disciplined investing
TABLE OF CONTENTS
MESSAGE FROM YOUR CHAIRMAN 1
ECONOMIC AND INVESTMENT REVIEW 2
STATEMENTS OF NET ASSETS 4
STATEMENTS OF OPERATIONS 56
STATEMENTS OF CHANGES IN NET ASSETS 60
FINANCIAL HIGHLIGHTS 64
NOTES TO FINANCIAL STATEMENTS 68
MESSAGE FROM YOUR CHAIRMAN
March 31, 1995
Dear Shareholder:
For the first six months of the fiscal year, the First American Investment
Funds, Inc. continued their steady growth. Assets under management surpassed
$1.8 Billion as of March 31, 1995, representing growth of over $600 Million
since September 30, 1994.
As you know, early in February the First American Mutual Fund portfolios were
merged into the First American Investment Funds, Inc. to eliminate investor
confusion and help streamline operations. Now that the merger has been
accomplished in the upcoming months we will be focused on increasing our
level of service to you. We are in the process of revising and upgrading our
shareholder statements to provide you with an easier to read more useful
document. You should see the results of this project in the next several
months. In addition, in the near future we will be offering an automated
voice response system that will allow shareholders to access performance,
prices and yields 24 hours a day toll-free.
Many of the Funds continued to perform above the averages in their categories
and several were once again recognized in national publications such as The Wall
Street Journal, Business Week, USA Today, and Kiplinger's for top performance.
In addition, the Chairman of First Asset Management, John Murphy, was invited to
appear on CNBC's Mutual Fund Investor Program to discuss First Asset
Management's economic outlook and investment philosophy.
The past six months have been a period of tremendous growth for the family
and we expect to see additional significant growth in the future. Through
these periods of growth, we will continue our commitment to improving and
maintaining our shareholder services and our disciplined approach to
investing.
Sincerely,
/s/ Joseph D. Strauss
Joseph D. Strauss
Chairman
ECONOMIC AND INVESTMENT REVIEW
March 31, 1995
At the halfway point in the First American Funds' fiscal year, major changes
in the economic and policy environment have become readily apparent. The
Federal Reserve's seven step doubling of short term interest rates and the
accompanying increase in bond yields have slowed final demand in the domestic
economy to a pace that better matches its productive capacity, thereby
reducing inflationary pressures. Perhaps consumers were riveted to the O.J.
Simpson trial, but more likely, rising indebtedness and a pervasive sense of
job insecurity, despite growing payrolls, sapped the urge to spend this year.
In any event, slowing retail sales, reduced auto production schedules,
accumulation of inventory, and lower housing starts tell us that the economy
is now growing at a 2.0% to 3.0% annual rate in contrast to
the 4.0% to 5.0% that characterized the latter portion
of 1994.
Productivity growth and very modest wage gains have kept the cost of labor at
extraordinarily low levels during this expansion. With labor's two-thirds of
input costs well contained, American industry has absorbed higher raw
material prices and still produced surprisingly strong profits with only
small end product price increases. This is fortunate, since current
competitive conditions rarely allow pricing flexibility. With inflation
contained, consumer and business credit available, and personal income
growing with healthy job creation, there is good reason to expect the
economic expansion to enjoy additional years of life.
For years the United States has generated insufficient savings to fully fund
its fiscal deficit and the related excess demand for goods and services. The
shortfall has been funded in international financial markets. Although the
anti-inflationary monetary policy of recent years has been confidence
building, our foreign creditors have become restive with chronic fiscal
deficits, expanding trade imbalances, and a growing abundance of dollars in
international currency markets. Into this unstable condition, mix a generous
helping of uncoordinated international fiscal and monetary policy
initiatives, foot-dragging on needed trade reform by our major overseas
trading partners, and a collapse of the Mexican peso and economy. Finally,
add a fiscal crisis in Canada and a slide in its dollar. In these
circumstances can the accelerating erosion of the U.S. dollar during the past
few months seem so surprising? The sweeping election victory that yielded
Republican majorities in both houses of Congress may launch a more
responsible approach to fiscal management, but fine print of the Contract
With America calls for Middle-America to part with entitlements, long held
sacred, in favor of budgetary balance. We can be sure our international
creditors are watching developments in Washington with particular interest.
Thus far, their assessment is not particularly optimistic. By contrast, we
believe the value of the dollar reflects undue pessimism. By virtually any
standard comparing purchasing power, the dollar is significantly undervalued
versus the yen and the mark. As a result, it is not hard to see the dollar
stabilizing, if not appreciating modestly, in the visible future.
Has the Fed finished tightening credit? This question is asked and answered
by investors every day, since the perceived trend of short interest rates
largely determines the valuation of the bond and stock markets. Today's
slowing economy and low inflation bode well for unchanged, if not lower,
short interest rates. The weak dollar and soaring input prices suggest the
opposite. The current level of the bond and stock markets seems to imply a
consensus for no additional increases in short rates. We are not as sure, but
believe that if monetary policy is tightened one more notch, the lift in
rates would probably be the last for this cycle.
Bond yields peaked just as the Funds' fiscal year began last fall. The
slowing economy, low inflation, new Congressional budget balancing
initiatives, and strong internal corporate financing capability combined to
drive the meaningful bond market rally that lifted your fixed income
portfolios this fiscal year. Yields all along the curve fell with a
particularly dramatic drop in intermediate bond yields. The 5 year treasury
yield has fallen almost one percentage point while long treasury bond yields
declined about three-quarters of a percent and could fall further, although
we believe the rally is close to its finish. First American bond funds
extended maturity last fall to successfully capture much of the rally's
benefit. Believing bonds to be near fair value, the fixed income funds
recently shortened maturity to a neutral stance versus their respective
benchmark averages.
The slowing of economic growth to a sustainable pace carried the prospect of
an end to monetary tightening, a lesson not lost on the stock market this
fiscal year. Stocks rallied strongly and the market averages now stand at
record highs. Surprisingly strong earning gains have supported equity
valuations for many months and promise to remain a favorable factor in the
investment equation for at least several more quarters. This is not to ignore
the heated debate over the impact of slowing domestic economic growth, but
extensive restructuring of American corporations in both the manufacturing
and service sectors has produced cost structures which seems capable of
surprising investors with better than expected earnings gains. Stocks of
companies that are "fixing problems" have been rewarding investments for the
funds.
Although the weak dollar may be a concern for the United States in general,
it has accentuated comparatively our low unit labor costs, which favor export
oriented corporations versus their competitors in other established
industrial nations. First American Funds in both value and growth styles have
invested in the stock of firms that are well positioned to profit from our
country's increasing competitive stature in global markets. We have also
focused on firms with operations or expansion plans reaching rapidly growing
free markets worldwide. Our international investment strategy focuses on
rapidly growing world product markets as opposed to the comparatively
lethargic, mature industrial economies.
The family of First American Funds offers investors a wide choice of
investment alternatives in equity, fixed income, or money market portfolios.
Each fund employs a well defined discipline in its management. The confidence
of fund shareholders has been reflected in significant growth of investment
assets. It has been a privilege to serve our shareholders.
Sincerely,
/s/ John M. Murphy, Jr.
John M. Murphy, Jr.
Senior Managing Director
First Asset Management
Chairman, First Trust
STATEMENT OF NET ASSETS----MARCH 31, 1995 (Unaudited)
LIMITED TERM TAX FREE INCOME FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
MUNICIPAL BONDS--98.0%
ALASKA--7.8%
Anchorage, Telephone Utility (RB)
(AMBAC)
3.500%, 12/01/96 $250 $ 243
North Slope Borough, Series 1994 B (GO)
(CGIC)
5.200%, 06/30/96 250 252
North Slope Borough, Series G (GO)
(AMBAC)
7.500%, 06/30/97 400 421
Spring Creek Correctional Center, Series
A, Pre-refunded @ 102 (COP) (CGIC)
9.500%, 10/01/95 (B) 200 209
1,125
ARIZONA--2.7%
Maricopa County, Elementary School
District #17 (GO) (AMBAC)
0.000% 07/01/98 (D) 465 396
CALIFORNIA--15.8%
San Francisco, Port Commission (RB)
4.400%, 07/01/96 500 499
Sonoma County (COP)
4.600%, 08/01/96 470 465
State (GO)
6.000%, 05/01/97 500 511
State, Series C (RAN)
5.750%, 04/25/96 800 809
2,284
COLORADO--2.8%
Denver, City & County Airport, Series C,
Mandatory Put @ 100 (RB) (ST)
6.000%, 04/01/97 (C) 400 407
GEORGIA--1.8%
Cobb County, School District (GO)
6.125%, 02/01/96 250 253
ILLINOIS--6.0%
Aurora, Kane, & DuPage Counties, Single
Family Mortgage, Series 95 A (RB) (GNMA)
(AMT)
6.100%, 04/01/08 (D) 250 249
Development Finance Authority, School
District #300 (GO) (FGIC)
0.000% 12/01/96 455 423
Sales Tax, Series S (RB)
3.250%, 06/15/95 200 199
871
LOUISIANA--2.8%
Deepwater Port Authority, Series B (RB)
4.600%, 09/01/95 200 200
Public Facilities Authority, St. Francis
Medical Center Project (RB) (FSA)
3.550%, 07/01/96 $200 $ 199
399
MAINE--3.4%
Highway Authority (RB)
6.000%, 04/15/96 480 487
MASSACHUSETTS--1.7%
Housing Finance Agency, Insured Rental Housing,
Series A (RB) (AMBAC) (AMT)
4.900%, 01/01/97 250 251
MINNESOTA--26.1%
Dakota & Washington Counties, Housing &
Redevelopment Authority (RB) (GNMA/FHA)
(AMT)
5.750%, 09/01/16 325 329
Fridley, Commercial Development,
Mandatory Put @ 100 (RB) (AMT)
4.900%, 09/01/96 (C) 235 235
Hennepin County, Pre-refunded
@ 100 (GO)
6.600%, 12/01/96 (B) 300 310
Housing Finance Agency, Single Family
Mortgage, Series C (RB)
5.800%, 07/01/96 180 182
Housing Finance Agency, Single Family Mortgage,
Series R (RB) (AMT)
5.150%, 01/01/97 260 260
Minneapolis, Special School District #1
(COP)
4.750%, 06/01/96 300 299
Minnetonka, Multi-family Housing,
Southampton Apartments Project,
Mandatory Put @ 100
(RB) (NBOC)
4.750%, 06/01/95 (C) 500 502
Northern Municipal Power Agency (RB)
7.000%, 01/01/97 220 227
Southern Municipal Power Agency,
Escrowed to Maturity (RB)
4.500%, 01/01/96 140 140
Southern Municipal Power Agency,
Prerefunded @ 102 (RB)
7.375%, 01/01/96 (B) 200 208
Southern Municipal Power Agency, Series
B (RB)
4.500%, 01/01/96 360 359
5.000%, 01/01/98 250 249
St Paul, Independent School District
#625 (GO) (ISF)
6.500%, 02/01/97 300 309
Western Municipal Power Agency,
Series A,
Pre-refunded @ 102 (RB)
9.500%, 01/01/96 (B) $150 $ 158
3,767
NEW MEXICO--2.1%
Albuquerque Airport, Gross Receipts
Tax, Mandatory Put @ 100 (RB)
8.250%, 07/01/95 (C) 300 303
NEW YORK--1.8%
Medical Care Facilities, Series A,
Pre-refunded @ 102 (RB)
8.500%, 01/15/96 (B) 250 263
NORTH DAKOTA--2.2%
Cass County, Hospital Facility,
Mandatory Sinking Fund (RB)
8.500%, 09/01/97 300 314
RHODE ISLAND--5.5%
Pawtucket (GO) (FGIC)
7.750%, 04/15/97 750 790
TENNESSEE--1.9%
Local Development Authority, Community Provider
Loan Program (RB)
4.600%, 10/01/96 275 274
TEXAS--6.0%
Dallas, Waterworks & Sewer (RB)
8.200%, 04/01/97 500 529
State (GO)
6.700%, 12/01/96 320 331
860
VIRGINIA--1.7%
Fairfax County, Water Authority (RB)
3.350%, 04/01/96 250 246
WASHINGTON--4.1%
State Public Power Supply, Nuclear
Project #3, Series C (RB)
3.500%, 07/01/95 300 298
State, Series R-94 A (GO)
3.400%, 08/01/95 300 299
597
WYOMING--1.8%
State Student Loan Program (RB) (AMT)
6.000%, 12/01/97 250 255
TOTAL MUNICIPAL BONDS
(Cost $14,136) 14,142
CASH EQUIVALENTS--4.5%
Federated Tax Free Money Market
4.045%, 04/07/95 (A) 642,000 642
TOTAL CASH EQUIVALENTS
(Cost $642) $ 642
TOTAL INVESTMENTS--102.5%
(Cost $14,778) 14,784
OTHER ASSETS AND LIABILITIES--(2.5%)
Other Assets and Liabilities, Net (359)
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
1,380,922 outstanding shares 13,833
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 63,401
outstanding shares 634
Distributions in excess of net investment income (2)
Accumulated net realized loss on investments (46)
Net unrealized appreciation of investments 6
TOTAL NET ASSETS:--100.0% $14,425
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.99
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 9.99
MAXIMUM SALES CHARGE OF 2.00%+ 0.20
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.19
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 2.00%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or demand date.
(B) Pre-refunded Security--the pre-refunded date is shown as the maturity
date on the Statement of Net Assets.
(C) Mandatory Put Security--the mandatory put date is shown as the maturity
date on the Statement of Net Assets.
(D) When issued security (Total Cost Maricopa County, Arizona and Aurora,
Kane, and DuPage Counties, Illinois are $394,390 and $250,000
respectively)
AMT--Alternative Minimum Tax
AMBAC--American Municipal Bond Assurance Company
CGIC--Capital Guaranty Insurance Company
COP--Certificates of Participation
FGIC--Financial Guaranty Insurance Corporation
FHA--Federal Housing Authority
FSA--Financial Security Assurance
GNMA--Government National Mortgage Association
GO--General Obligation
ISF--Insured by State Funds
NBOC--National Bank of Canada
RAN--Revenue Anticipation Notes
RB--Revenue Bond
ST--Sumitomo Trust
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TAX FREE FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
MUNICIPAL BONDS--96.5%
ARIZONA--3.5%
Maricopa County, School District,
Pre-refunded @ 101 (GO) (FGIC)
5.400%, 07/01/97 (B) $1,000 $1,026
CALIFORNIA--6.5%
Contra Costa, Water District, Callable
10/01/04 @ 102 (RB) (MBIA)
5.800%, 10/01/07 1,000 1,016
Orange County, Transportation Authority, Callable
02/15/02 @ 102 (RB)
5.700%, 02/15/03 200 202
San Diego, Callable 01/01/04 @ 101 (RB)
5.625%, 01/01/06 200 202
State Health Facilities Authority,
Callable 10/01/98 @ 102 (RB) (CMI)
7.250%, 10/01/99 500 528
1,948
COLORADO--10.3%
Arvada, Sales & Use Tax, Callable
12/01/02 @ 100 (RB) (FGIC)
5.900%, 12/01/05 500 514
Aurora, Single Family Mortgage,
Series 1993-A
3.875%, 05/01/00 10 10
Boulder Valley, School District,
Region 2, Callable 12/01/04 @ 101 (GO)
(STAID)
5.950%, 12/01/07 500 513
Colorado Springs Utilities,
Crossover Refunding, Series A (RB)
6.350%, 11/15/01 1,000 1,076
State Housing Finance Authority,
Single Family Mortgages, Callable
08/01/99 @ 102 (RB) (FHA/VA)
7.400%, 08/01/09 915 940
3,053
FLORIDA--2.0%
Dade County, Senior High School
Facilities, Series A, Pre-refunded @
102 (LOC: Sumitomo Bank)
6.900%, 07/01/95 (B) 15 15
North Brevard County, Health,
Hospital, & Nursing Home Improvements,
Jess Parish Memorial Hospital (RB)
(AMBAC)
6.800%, 09/01/96 15 15
Reedy Creek, Utility, Callable
10/01/97 @ 102 (RB)
8.900%, 10/01/03 500 554
584
ILLINOIS--5.3%
Aurora, Kane, & DuPage Counties,
Single Family Mortgage, Series 1995-A
(RB) (GNMA) (AMT)
6.100%, 04/01/08 (C) $ 750 $ 747
Lansing, Sales Tax, Callable 12/01/02
@102 (RB) (AMBAC)
5.350%, 12/01/04 835 835
1,582
INDIANA--1.5%
Perry Township, Multi-School Building, Escrowed
To Maturity (RB) (STAID)
7.000%, 07/01/97 15 16
State Housing Finance Authority, Callable
07/01/98 @ 102.5, (RB) (FPI)
7.800%, 01/01/99 415 430
446
IOWA--0.3%
Davenport, Home Ownership Mortgage,
Series 1994 (RB)
4.000%, 03/01/03 100 98
MICHIGAN--0.6%
Dearborn School District, Callable
05/01/03 @ 101.5 (GO) (MBIA)
4.850%, 05/01/05 100 95
St. Joseph, Hospital Finance Authority
(RB) (AMBAC)
4.750%, 01/01/02 100 96
191
MINNESOTA--16.6%
Anoka County, Solid Waste Disposal,
(RB) (AMT) (CFC)
6.000%, 12/01/98 1,000 1,020
Minneapolis & St. Paul, Housing &
Redevelopment Authority, Callable
11/15/03 @ 102 (RB) (AMBAC)
4.750%, 11/15/18 1,000 825
Minneapolis, Hennepin Avenue,
Series C (GO)
6.200%, 03/01/02 800 847
Robbinsdale, North Memorial Medical
Center, Series B, Callable 05/15/03
@ 102, (RB) (AMBAC)
5.450%, 05/15/13 1,000 948
Southern Minnesota, Municipal Power
Authority, Un-refunded Balance, Series A,
Callable 01/01/03 @ 102 (RB)
5.600%, 01/01/04 445 446
State Higher Education, Supplemental
Student Loan Program, Series A, Credit
Support Norwest Bank (RB)
4.150%, 12/01/00 500 500
State, Public Improvements,
Pre-refunded @ 100 (GO)
5.800%, 08/01/04 (B) $ 250 $ 260
Wayzata, School District, Series B,
Callable 02/01/03 @ 100 (RB) (FGIC)
4.900%, 02/01/07 100 93
4,939
MISSOURI--3.5%
Kansas City, School District (RB) ( FGIC)
6.300%, 02/01/00 1,000 1,045
NEW MEXICO--4.1%
Farmington, Utility Systems, Escrowed
to Maturity (RB)
10.000%, 01/01/02 685 808
State University (RB)
7.800%, 04/01/97 400 423
1,231
NEW YORK--1.8%
Environmental Facilities, Pollution Control,
Callable 11/15/04 @ 102 (RB)
6.400%, 05/15/06 500 540
NORTH DAKOTA--9.8%
Bismarck, Hospital Authority (RB) (AMBAC)
6.250%, 05/01/99 1,000 1,050
Fargo, Water Authority, Callable
1/01/04 @ 100 (RB) (MBIA)
5.000%, 01/01/05 300 282
Fargo, Water Utilities, Callable
01/01/00 @ 100 (RB)
5.900%, 01/01/02 500 513
State Bank Capital Financing Program,
Series E (GO)
6.400%, 12/01/95 20 20
State Building Authority, Escrowed To
Maturity (RB) (AMBAC)
6.900%, 06/01/97 500 523
6.900%, 06/01/98 500 529
2,917
OHIO--0.8%
Kings County, Local School District,
Callable 12/01/05 @ 100 (RB) (FGIC)
5.750%, 12/01/10 (C) 250 251
OKLAHOMA--0.8%
Oklahoma County, Home Finance
Authority, Pre-refunded @ 100 (RB)
0.000%, 03/01/06 (B) 790 248
OREGON--5.9%
Deschutes & Jefferson Counties,
School District, (GO) (MBIA)
5.000%, 06/01/02 $ 500 $ 493
Multnomah County, School District (GO)
5.100%, 06/01/03 500 496
Multnomah, School District #3, Callable
12/01/05 @100 (GO) (FGIC)
5.500%, 12/01/06 500 499
State (GO)
7.000%, 07/01/01 250 274
1,762
PENNSYLVANIA--4.6%
Commonwealth, Callable 05/01/04
@ 101.5 (GO)
5.300%, 05/01/06 300 296
Northumberland County, Commonwealth
Lease, Callable 10/15/01 @ 100 (RB)
6.600%, 10/15/02 1,000 1,085
1,381
PUERTO RICO--1.7%
Housing Finance Authority, Single
Family Mortgage (RB) (GNMA)
5.800%, 10/15/00 250 256
6.000%, 02/01/02 250 255
511
SOUTH DAKOTA--1.8%
Sioux Falls (COP)
6.450%, 08/01/01 500 536
TENNESSEE--1.7%
Nashville & Davidson County,
Metropolitan Government (GO)
5.000%, 05/15/05 500 491
TEXAS--0.1%
San Antonio, Texas Electric & Gas
Improvement, (RB)
6.900%, 02/01/96 15 15
UTAH--1.8%
Intermountain Power Authority,
Callable 07/01/98 @ 102 (RB)
7.625%, 07/01/08 500 538
VIRGINIA--2.7%
Riverside, Regional Jail Authority Facility,
Callable 07/01/05 @ 102, (RB) (MBIA)
5.700%, 07/01/08 500 496
Virginia Beach, Callable 11/01/04
@ 102 (GO) (STAID)
5.500%, 11/01/05 $ 300 $ 296
792
WASHINGTON--0.9%
State (GO)
6.600%, 02/01/03 250 272
WASHINGTON, D.C.--0.7%
District of Columbia, Callable
06/01/98 @ 101.5 (GO) (MBIA)
6.750%, 06/01/01 200 210
WISCONSIN--7.1%
Milwaukee County, Callable 09/01/02
@ 100 (GO)
5.550%, 09/01/03 1,000 1,001
Oak Creek, Water Works System,
Callable 12/01/95 @100 (RB)
5.600%, 12/01/96 25 25
State Health & Educational Facilities,
Childrens Hospital, Series B (RB) FGIC)
6.500%, 08/15/95 15 15
State, Pre-refunded @100 (GO)
6.900%, 05/01/98 (B) 1,000 1,058
2,099
WYOMING--0.1%
State Community Development
Authority, Single Family Mortgage,
Series A (RB) (FHA)
6.400%, 06/01/95 15 15
TOTAL MUNICIPAL BONDS
(Cost $28,049) 28,721
CASH EQUIVALENTS--4.0%
Federated Minnesota Municipal Cash Trust
4.089%, 04/07/95 (A) 474,000 474
Federated Tax Free Money Market
4.045%, 04/07/95 (A) 706,000 706
TOTAL CASH EQUIVALENTS
(Cost $1,180) 1,180
TOTAL INVESTMENTS--100.5%
(Cost $29,229) 29,901
OTHER ASSETS AND
LIABILITIES--(0.5%)
Other Assets and Liabilities, Net (144)
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
2,731,931 outstanding shares $27,892
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 106,601
outstanding shares 1,136
Distributions in excess of net investment income (3)
Accumulated net realized gain on investments 60
Net unrealized appreciation of investments 672
TOTAL NET ASSETS:--100.0% $29,757
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 10.48
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 10.49
MAXIMUM SALES CHARGE OF 3.00%+ 0.32
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.81
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 3.00%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or the demand date.
(B) The pre-refunded date is shown as the maturity date on the Statement of
Net Assets.
(C) When issued security (Total Cost of Aurora, Kane and DuPage Counties
Illinois and Kings County Ohio are $250,000 and $750,000 respectively.)
AMBAC--American Municipal Bond Assurance Company
AMT--Alternative Minimum Tax
CFC--National Rural Utilities Co-op Finance Corporation
CMI--California Municipal Insurers
COP--Certificates of Participation
FGIC--Financial Guaranty Insurance Corporation
FHA--Federal Housing Authority
GNMA--Government National Mortgage Association
FPI--Foremost Pool Insurance
GO--General Obligation
LOC--Letter of Credit
MBIA--Municipal Bond Insurance Association
RB--Revenue Bond
STAID--State Aid Withholding
VA--Veterans Administration
The accompanying notes are an integral part of the financial statements.
MINNESOTA INSURED INTERMEDIATE TAX FREE FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
MUNICIPAL BONDS--97.4%
MINNESOTA--97.4%
Anoka County, Capital Improvement,
Series C (GO)
5.550%, 02/01/05 $2,000 $1,998
Anoka-Hennepin, Callable 02/01/03 @ 100
(GO) (FGIC)
4.875%, 02/01/07 500 463
Becker, Pollution Control, Callable
04/01/99 @ 102 (RB)
6.800%, 04/01/07 2,500 2,631
Becker, Tax Increment-Series D, Callable
08/01/04 @ 100 (GO) (AMT) (MBIA)
6.000%, 08/01/07 2,500 2,553
Bloomington, Mall of America Project,
Series A, Callable 02/01/04 @ 100 (RB)
(FSA)
5.450%, 02/01/09 3,850 3,780
Burnsville Apartment Projects, Series A,
Putable 12/01/98 @ 100 (RB) (PMLIC)
5.000%, 12/01/08 3,000 2,993
Coon Rapids, Single Family Mortgage,
Callable 09/01/04 @ 102 (RB)
5.900%, 09/01/06 455 456
Dakota County, Housing & Redevelopment Authority,
Single Family, Callable 09/01/98
@ 103 (RB) (GNMA,FHA/VA)
7.250%, 03/01/06 820 823
Dakota, Washington & Stearns Counties,
Single Family Mortgage, Callable 3/01/04
@ 102 (AMT) (RB) (FNMA)
6.000%, 09/01/04 650 657
Duluth, Economic Development Authority, Health
Care Facilities, Callable 11/01/02
@ 102 (RB) (AMBAC)
6.100%, 11/01/04 900 950
Faribault, Independent School District,
Callable 6/01/04 @ 100 (GO)
6.750%, 06/01/05 1,000 1,096
Mankato, Independent School District,
Series A, Callable 02/01/04 @ 100 (GO)
(CGIC)
5.000%, 02/01/05 800 769
Minneapolis & St. Paul, Housing & Redevelopment
Authority, Health Care, Callable 11/15/03 @ 102
(RB) (AMBAC)
4.750%, 11/15/18 1,000 825
Minneapolis & St. Paul Metropolitan
Airports, Callable 01/01/99
@ 102 (RB) (AMT)
7.800%, 01/01/11 1,000 1,090
Minneapolis & St. Paul, Housing And Redevelopment
Authority, Health Care, Callable 08/15/00 @ 102
(RB) (MBIA)
7.300%, 08/15/01 $1,000 $1,115
Minneapolis & St. Paul, Housing Finance
Board, (RB) (AMT) (FNMA/GNMA)
6.800%, 11/01/08 1,500 1,605
Minneapolis & St. Paul, Housing Finance
Board, Single Family Mortgage, Series A
(RB) (AMT) (GNMA,FHA/VA)
7.875%, 12/01/12 45 46
Minneapolis, Community Development
Agency (RB) (MBIA)
7.000%, 03/01/01 2,500 2,766
Minneapolis, Convention Center,
Pre-refunded @ 102 (RB)
(AMBAC)
7.400%, 04/01/98 (B) 500 514
Minneapolis, Health Care Facilities,
Callable 11/15/03 @ 102
(RB) (MBIA)
5.100%, 11/15/05 1,000 956
Minneapolis, School District No. 1 (RB)
(AMBAC)
5.300%, 02/01/02 1,000 1,003
Minnesota State Public Facility
Authority, Water Pollution Control,
Callable 12/01/99 @ 100
(RB) (CGIC)
6.750%, 03/01/00 1,000 1,070
Minnesota State, Housing & Redevelopment
Authority, Single Family, Callable 04/01/04
@ 102 (RB) (AMT) (FNMA)
6.250%, 10/01/04 1,065 1,076
Minnesota State, Housing Financial
Agency, Single Family Mortgage, Series
D, Callable 01/01/04 @ 102 (RB) (AMBAC)
4.800%, 07/01/04 800 766
Minnesota State, Pre-refunded
@ 100 (GO)
5.800%, 08/01/04 (B) 750 779
Minnesota State, Pre-refunded
@ 100 (GO)
6.800%, 08/01/00 (B) 2,790 2,964
Minnesota Tax-Exempt Mortgage Trust,
Series A (RB) (Northwestern National)
5.688%, 08/01/96 (A) 115 115
Minnesota Tax-Exempt Mortgage Trust,
Series C (RB) (Northwestern National)
7.094%, 09/01/10 (A) 898 888
Northern Minnesota Power Agency,
Callable 01/01/99 @102 (RB) (AMBAC)
7.250%, 01/01/00 $ 700 $ 762
Northern Municipal Power Agency,
Minnesota Electric, Series A, Callable
01/01/03 @ 102 (RB) (AMBAC)
5.700%, 01/01/05 2,000 2,033
Olmsted County Minnesota, Pre-refunded
@ 100 (GO)
6.550%, 02/01/98 (B) 1,000 1,033
Olmsted County, Housing And
Redevelopment, Pre-refunded 02/01/01 @
100 (RB)
7.000%, 02/01/05 (B) 1,025 1,125
Olmsted County, Pre-refunded 02/01/97
@ 100 (GO)
6.650%, 02/01/99 (B) 1,000 1,034
Osseo, Independent School District (GO)
5.700%, 02/01/03 2,000 2,033
Osseo, Independent School District,
Callable 02/01/03 @ 100 (GO) (FGIC)
5.400%, 02/01/05 500 497
Plymouth Health Facilities, Callable
06/01/04 @ 102 (RB) (CGIC)
6.200%, 06/01/11 1,360 1,396
Robbinsdale, North Center Project,
Escrowed To Maturity (RB) (AMBAC)
6.750%, 01/01/97 400 415
Robbinsdale, North Memorial Medical
Center, Series B, Callable 05/15/03 @
102 (RB) (AMBAC)
5.450%, 05/15/13 1,000 948
Rochester, St. Mary's Hospital,
Escrowed To Maturity (RB)
5.750%, 10/01/07 3,000 3,050
Rosemount, Independent School
District, Series B (GO) (FGIC)
5.600%, 02/01/98 1,000 1,016
Saint Louis Park, Hospital Revenue
Facilities, Methodist Hospital, Series
C, Pre-refunded 07/01/00 @ 102
(RB) (AMBAC)
7.150%, 07/01/02 (B) 1,240 1,381
Southern Minnesota Municipal Power
Agency (RB) (MBIA)
4.850%, 01/01/07 375 342
Southern Minnesota Municipal Power
Agency, Refunded Balance Series A,
Callable 01/01/03 @ 102 (RB)
5.600%, 01/01/04 255 265
St. Paul, Housing & Redevelopment
Authority, Callable 9/01/05
@ 102 (RB) (FNMA)
6.125%, 03/01/17 $ 500 $ 504
St. Paul, Housing And Development
Authority, Downtown & Seventh Place
Project (RB) (AMBAC)
4.850%, 09/01/01 500 490
St. Paul, Sewer Revenue Bond, Callable
06/01/03 @ 100 (RB) (AMBAC)
5.350%, 12/01/04 800 801
Stearns County, Housing And
Redevelopment Authority, Callable
02/01/99 @ 102 (RB) (AMBAC)
6.750%, 02/01/04 1,665 1,777
Stillwater, Independent School District,
Callable 02/01/02 @ 100 (RB) (FGIC)
5.200%, 02/01/03 2,500 2,475
Washington County, Housing And
Redevelopment Authority, Jail Facility (RB)
6.400%, 02/01/00 1,000 1,058
Washington County, Housing And
Redevelopment Authority, Pre-refunded
@ 100 (RB)
6.800%, 02/01/04 (B) 1,500 1,644
Washington County, Housing And
Redevelopment, Jail Facilities (RB)
4.900%, 02/01/01 750 743
Washington County, Raymie Johnson
Apartments, Series C
(RB) (FGIC)
6.000%, 01/01/10 1,340 1,332
Wayzata Independent School District,
Series B, Callable 02/01/03
@ 100 (GO) (FGIC)
4.900%, 02/01/07 800 745
Willmar, Independent School District,
Callable 02/01/02 @ 100 (GO) (AMBAC)
6.150%, 02/01/09 100 103
Wright County, Solid Waste, Series C,
Callable 12/01/99 @ 100 (RB)
(AMT) (CGIC)
7.000%, 12/01/05 500 543
TOTAL MINNESOTA 66,292
TOTAL MUNICIPAL BONDS
(Cost $64,831) 66,292
CASH EQUIVALENTS--1.8%
Federated Minnesota Municipal
Cash Trust
4.089%, 04/07/95 (A) 1,247,000 $ 1,247
TOTAL CASH EQUIVALENTS
(Cost $1,247) 1,247
TOTAL INVESTMENTS--99.2%
(Cost $66,078) 67,539
OTHER ASSETS AND LIABILITIES--0.8%
Other Assets and Liabilities, Net 543
NET ASSETS:
Portfolio shares--Institutional Class ($.0001 par
value--2 billion authorized) based on 6,783,368
outstanding shares 64,875
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 192,079
oustanding shares 1,850
Distributions in excess of net investment income (35)
Accumulated net realized loss on investments (69)
Net unrealized appreciation of investments 1,461
TOTAL NET ASSETS:--100.0% $68,082
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.76
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 9.76
MAXIMUM SALES CHARGE OF 3.00%+ 0.30
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.06
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 3.00%.
(A) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995. The date shown is
the longer of the reset date or demand date.
(B) The pre-refunded date is shown as the maturity date on the Statement of
Net Assets.
AMBAC--American Municipal Bond Assurance Company
AMT--Alternative Minimum Tax
CGIC--Capital Guaranty Insurance Company
FGIC--Financial Guaranty Insurance Company
FHA/VA--Federal Housing Authority/Veterans Administration
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance
GNMA--Government National Mortgage Association
GO--General Obligation
MBIA--Municipal Bond Insurance Company
PMLIC--Phoenix Mutual Life Insurance Company
RB--Revenue Bond
The accompanying notes are an integral part of the financial statements.
COLORADO INTERMEDIATE TAX FREE FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
MUNICIPAL BONDS--94.7%
COLORADO--94.7%
Adams County, School District #1 (GO)
(FGIC)
6.000%, 12/01/00 $ 250 $ 262
Adams County, School District #12,
Callable 12/15/96 @ 101 (GO)
7.650%, 12/15/03 975 1,026
Arapahoe County, Cherry Creek School
District #5, Callable 12/15/00 @ 101 (GO)
6.800%, 12/15/01 1,000 1,088
Arapahoe County, Cherry Creek School
District #5, Callable 12/15/95 @ 102 (GO)
5.600%, 12/15/97 1,000 1,023
Arvada, Sales & Use Tax, Callable
12/01/02 @ 100 (RB) (FGIC)
5.900%, 12/01/05 500 514
Auraria, Higher Education Center,
Callable 04/01/03 @ 101 (RB) (FSA)
5.000%, 04/01/05 500 479
Aurora, Callable 12/01/04 @ 101 (COP)
6.000%, 12/01/06 1,000 1,010
Aurora, Educational Development Authority,
Aurora Community College (RB)
5.750%, 10/15/04 500 477
Aurora, Single Family Mortgage, Series
1993 A (RB)
3.875%, 05/01/00 10 10
Boulder County, Sales & Use Tax
(RB) (FGIC)
5.750%, 12/15/05 1,000 1,019
Boulder Valley, School District #Re 2,
Callable 10/15/01 @ 100 (GO)
5.900%, 10/15/02 500 520
5.900%, 10/15/03 500 518
Boulder Valley, School District #Re 2,
Callable 12/01/04 @ 101, 12/01/06 @
100 (STAID) (GO)
5.950%, 12/01/07 500 513
Boulder, Callable 10/01/01 @ 101 (GO)
5.700%, 10/01/04 250 258
Boulder, Larimer, & Weld Counties, Vrain
Valley School District #Re 1-JT, Callable
12/15/02 @ 101 (GO) (MBIA)
6.000%, 12/15/10 1,000 1,021
Boulder, Larimer, & Weld Counties,
Vrain Valley School District,
Pre-refunded @ 101 (GO)
7.200%, 12/15/99 (B) 500 548
Boulder, Urban Renwal Tax Allocation
(RB) (MBIA)
5.700%, 03/01/00 1,250 1,295
Breckenridge, Excise Tax (RB) (MBIA)
5.000%, 12/01/99 $ 500 $ 500
5.100%, 12/01/00 500 505
Brighton, Callable 12/01/01 @ 101 (GO)
(MBIA)
6.350%, 12/01/05 500 529
Broomfield, Callable 11/01/96 @ 101 (GO)
7.600%, 11/01/03 1,000 1,048
Centennial Water & Sanitation, Series A,
Callable 12/01/96 @ 101 (GO) (SWB)
4.750%, 12/01/97 500 498
Colorado Springs, Series A, Callable
11/15/01 @ 102 (RB)
6.625%, 11/15/04 1,000 1,088
Denver, City & County Airport, Series C,
Mandatory Put @ 100 (RB) (ST)
6.000%, 04/01/97 (C) 1,250 1,272
Denver, City & County School District
#1 (GO)
5.600%, 06/01/08 350 343
Douglas County, School District #1
Douglas & Elbert Counties, Callable
12/15/04 @ 101 (GO) (MBIA)
6.400%, 12/15/11 1,000 1,039
Eagle, Garfield, & Routt Counties,
School District #50 J, Callable
12/01/04 @ 102 (GO) (FGIC)
6.125%, 12/01/09 1,290 1,323
El Paso County, School District #20 (COP)
6.100%, 12/01/99 250 255
Fort Collins, Callable 12/01/02 @ 101 (GO)
5.550%, 12/01/03 500 509
6.400%, 12/01/09 575 602
Fort Collins, Downtown Development
Authority (RB) (MBIA)
6.200%, 06/01/01 250 266
Garfield, Pitkin, & Eagle Counties,
School District #1 (GO) (MBIA)
6.000%, 12/15/04 1,000 1,053
Jefferson County, Industrial
Development (RB)
6.625%, 09/01/01 250 265
Jefferson County, Metropolitain Y.M.C.A.,
Callable 08/01/04 @ 100 (RB)
7.500%, 08/01/08 1,000 1,006
Jefferson County, School District #R 1,
Callable 12/15/02 @ 101 (GO) (AMBAC)
5.900%, 12/15/04 475 496
La Plata County, School Districts
#9 & Durango, Callable 11/01/02
@ 101 (GO) (FGIC)
6.200%, 11/01/05 1,000 1,053
Larimer County, School District #R-1
Poudre (GO)
5.400%, 12/15/04 $ 750 $ 742
Larimer, Weld, & Boulder Counties,
School District #R 2J Thompson,
Callable 12/15/04 @ 100 (GO)
5.900%, 12/15/06 1,000 1,021
Longmont (GO)
5.250%, 11/15/01 250 253
Longmont, Callable 09/01/01 @ 100 (GO)
6.000%, 09/01/03 500 519
Louisville, Callable 06/01/98 @ 101
(GO) (FGIC)
7.200%, 12/01/04 465 496
Morgan City, Pollution Control, Series A,
Callable 6/01/03 @ 101 (RB) (MBIA)
5.500%, 06/01/12 1,000 958
Northglenn, Callable 11/01/96 @ 101
(GO) (MBIA)
6.400%, 11/01/98 500 515
7.125%, 11/01/06 500 519
Platte River Power Authority, Series BB (RB)
5.500%, 06/01/02 500 511
Poudre Valley, Hospital District,
Pre-refunded @ 101 (RB)
6.700%, 11/15/98 (B) 500 534
Pueblo County, Single Family Mortgage,
Callable 11/01/04 @ 102 (RB)
(GNMA/FNMA)
6.400%, 11/01/13 1,100 1,111
Pueblo, Urban Renewal Authority,
Callable 12/01/03 @ 101 (RB) (AMBAC)
5.800%, 12/01/09 840 846
South Suburban Park & Recreation
District (GO) (MBIA)
0.000% 12/15/01 1,000 714
State Board of Agriculture, Fort Lewis
College (RB) (FGIC)
6.000%, 10/01/02 250 265
State Colleges Board, Mesa State College,
Series B Enterprise, Callable 05/15/04
@ 101 (RB) (MBIA)
5.500%, 05/15/09 1,210 1,184
State Housing Finance Authority (RB)
5.000%, 06/01/04 195 185
State Housing Finance Authority,
Multi-family Housing,
Series A (RB) (FHA)
5.125%, 10/01/03 695 670
State Housing Finance Authority,
Single Family Mortgage, Series C-2
(RB) (FHA) (AMT)
6.850%, 08/01/22 350 354
State Regional Transit District, Sales
Tax, Pre-refunded @ 101 (RB)
7.100%, 11/01/00 (B) $ 500 $ 553
State Student Loan Obligation
Authority, Series A (RB)
6.250%, 06/01/96 240 243
State Water Resources & Power
Development Authority, Callable
09/01/02 @ 101 (RB) (FSA)
5.900%, 09/01/03 250 262
State Water Resources & Power
Development Authority, Clean Water
Project, Callable 09/01/02 @ 102 (RB)
5.800%, 09/01/06 150 154
Steamboat Springs, Accommodations Tax, Callable
03/01/04 @ 100 (RB) (MBIA)
5.800%, 03/01/10 1,000 1,004
Stonegate Village Metropolitan District,
Callable 12/01/02 @ 100 (GO)
6.300%, 12/01/04 500 523
Summit County, School District #Re 1,
Callable 12/01/04 @ 101 (GO) (FGIC)
6.450%, 12/01/08 1,250 1,320
Thornton (GO) (FGIC)
5.600%, 12/01/02 1,000 1,024
Thornton, Callable 12/01/02 @ 101 (GO)
(FGIC)
5.650%, 12/01/03 500 514
University of Colorado Hospital
Authority (RB) (AMBAC)
5.250%, 11/15/99 1,400 1,427
Ute Water Conservancy District,
Callable 06/15/97 @
100 (RB) (AMBAC)
7.700%, 06/15/02 1,000 1,056
Westminster, Water & Wastewater
Utility Enterprise, Callable 10/01/04
@ 100 (RB) (AMBAC)
5.800%, 12/01/05 1,000 1,035
TOTAL COLORADO 45,743
TOTAL MUNICIPAL BONDS
(Cost $44,324) 45,743
CASH EQUIVALENTS--3.1%
Federated Tax Free Money Market
4.045%, 04/07/95 (A) 1,499,000 1,499
TOTAL CASH EQUIVALENTS
(Cost $1,499) 1,499
TOTAL INVESTMENTS--97.8%
(Cost $45,823) 47,242
OTHER ASSETS AND LIABILITIES--2.2%
Other Assets and Liabilities, Net $ 1,051
NET ASSETS:
Portfolio shares--Institutional Class ($.0001 par
value--2 billion authorized) based on 4,545,055
outstanding shares $45,583
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 125,114
outstanding shares 1,275
Distributions in excess of net investment income (5)
Accumulated net realized gain on investments 21
Net unrealized appreciation of investments 1,419
TOTAL NET ASSETS:--100.0% $48,293
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE--INSTITUTIONAL CLASS $ 10.34
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 10.34
MAXIMUM SALES CHARGE OF 3.00%+ 0.32
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.66
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 3.00%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or demand date.
(B) Pre-refunded Security--the pre-refunded date is shown as the maturity
date on the Statement of Net Assets.
(C) Mandatory Put Security--the mandatory put date is shown as the maturity
date on the Statement of Net Assets.
AMT--Alternative Minimum Tax
AMBAC--American Municipal Bond Assurance Company
COP--Certificates of Participation
FGIC--Financial Guaranty Insurance Corporation
FHA--Federal Housing Authority
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance
GNMA--Government National Mortgage Association
GO--General Obligation
MBIA--Municipal Bond Insurance Association
RB--Revenue Bond
ST--Sumitomo Trust
STAID--State Aid Withholding
SWB--Swiss Bank
The accompanying notes are an integral part of the financial statements.
LIMITED TERM INCOME FUND
Description Par (000) Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSET BACKED SECURITIES--64.1% (1)
Amerisource Receivables Master
Trust 1995-1 A
6.475%, 03/15/00 $3,500 $3,500
Auto Bond Receivables Trust 1993-1 A
6.125%, 11/15/98 1,863 1,823
BCI Home Equity Loan 1991-1 A1
7.100%, 09/15/06 55 55
BCI Home Equity Loan 1994-1 B
6.725%, 05/01/95 (B) 2,611 2,614
Boulevard Auto Trust 1993-1 A
4.550%, 03/15/98 1,281 1,262
Capital Auto Receivable Asset Trust
1993-1 CTFS
5.850%, 02/15/98 1,100 1,077
CFC Grantor Trust TR14 A
7.150%, 11/15/06 (A) 4,496 4,429
Chemical Financial Acceptance
1991-A A
6.450%, 12/15/97 1,894 1,852
First USA Credit Card Master
Trust 1995-1
6.265%, 10/15/01 (B) 4,100 4,097
Greentree Financial 1995-A A1
7.000%, 04/15/20 2,500 2,498
HFC Home Equity Loan Trust 1992-2 B
6.850%, 11/20/12 1,941 1,856
Household Finance 1992-3 A3
6.100%,11/20/06 (B) 2,478 2,438
Leasing Solutions Receivables 1994-1 A
5.575%, 03/15/99 1,125 1,113
Leasing Solutions Receivables 1994-2 A
8.075%, 12/15/99 2,659 2,660
Midlantic Automobile Grantor Trust 1992-1 B
5.150%, 09/15/97 1,533 1,524
New South Auto Trust 1994-B A
8.475%, 01/15/02 3,853 3,905
Olympic Automobile Receivables Trust 1993-C B
4.600%, 02/15/00 2,307 2,238
Orix Credit Alliance Owner Trust 1993-A A2
4.300%, 08/17/98 2,302 2,265
Orix Credit Alliance Owner
Trust 1993-A B
4.600%, 08/17/98 1,535 1,508
Premier Auto Trust 1992-1 A
5.750%, 07/15/97 (A) 646 643
Premier Auto Trust 1992-5 B
4.900%, 12/15/95 1,502 1,475
Premier Auto Trust 1993-4 B
4.950%, 02/02/99 1,200 1,170
Premier Auto Trust 1994-2 B
6.500%, 06/02/00 4,300 4,226
RCI Vacation Ownership Mortgage
Trust 1991-B
7.500%, 08/25/98 (A) 2,205 2,179
Remodelers Home Improvement 1994-1 A
7.800%, 11/20/99 (A) 1,771 1,766
Saxon Mortgage Securities 1994-4A 1A2
5.250%, 04/25/24 $3,831 $3,682
The Money Store Home Equity Loan
Trust 1992-D1 A1
6.500%, 01/15/04 3,750 3,688
The Money Store Home Equity Loan
Trust 1993-B A1
5.400%, 08/15/05 3,438 3,266
The Money Store Home Equity Loan
Trust 1994-C1 A1
6.775%, 09/15/07 2,127 2,106
The Money Store Home Equity Loan
Trusts 1994-D1 A2
8.000%, 11/15/07 4,000 4,022
Western Financial Grantor
Trust 1991-3 A
6.750%, 01/01/97 1 1
Western Financial Grantor
Trust 1993-2 A2
4.700%, 10/01/98 2,750 2,662
Western Financial Grantor
Trust 1994-3 B
6.650%, 12/01/99 2,677 2,625
World Omni Leasing 1993-1 B
5.000%, 05/17/99 1,408 1,378
Zions Auto Trust 1993-1 B
5.650%, 06/15/99 2,250 2,206
TOTAL ASSET BACKED SECURITIES
(Cost $80,544) 79,809
CORPORATE OBLIGATIONS--17.0%
AEROSPACE & DEFENSE--1.4%
Lockheed
4.570%, 04/03/95 750 750
6.762%, 05/11/95 (B) 1,000 1,000
1,750
BANKS--0.8%
Fleet/Norstar Financial Group
10.200%, 09/15/95 1,000 1,016
CHEMICALS--0.4%
ICI Wilmington
7.830%, 05/09/95 500 501
ELECTRICAL SERVICES--0.8%
Houston Lighting & Power
8.625%, 01/15/96 1,000 1,016
FINANCIAL SERVICES--5.1%
American General Finance
7.300%, 10/16/95 500 503
Beneficial
6.060%, 06/30/95 1,000 999
Chrysler Financial
5.330%, 08/01/08 1,350 1,343
Discover Credit
6.680%, 05/15/95 500 500
Heller Financial
6.500%, 11/15/95 1,000 999
IBM Credit
5.130%, 08/11/95 $1,000 $ 996
Xerox Credit
5.375%, 07/15/95 1,000 998
6,338
FOOD, BEVERAGE & TOBACCO--2.4%
ConAgra
9.190%, 06/30/95 1,000 1,007
Philip Morris
6.250%, 06/05/95 1,000 1,000
8.875%, 07/01/96 900 920
2,927
MEDICAL PRODUCTS & SERVICES--0.4%
Baxter International
8.200%, 04/01/95 500 500
PAPER & PAPER PRODUCTS--0.4%
International Paper
9.625%, 10/15/95 450 457
PETROLEUM REFINING--0.8%
Ashland Oil
9.875%, 09/01/95 500 507
Atlantic Richfield
10.375%, 07/15/95 500 506
1,013
RAILROADS--0.2%
Union Pacific
9.160%, 09/25/95 250 253
REPAIR SERVICES--0.4%
Hertz
8.000%, 04/01/95 500 500
RETAIL--1.4%
Dayton Hudson
4.820%, 04/01/96 1,000 981
Wendy's International
12.125%, 04/01/95 750 750
1,731
SEMI-CONDUCTORS/INSTRUMENTS--0.5%
Intel O/S
0.000% 05/15/95 608 604
TELEPHONES & TELECOMMUNICATION--0.6%
Southwestern Bell Telephone
9.000%, 07/17/95 (A) 750 755
WHOLESALE--1.4%
Salomon
4.800%, 05/15/95 $1,000 $ 998
Supervalu
5.875%, 11/15/95 750 747
1,745
TOTAL CORPORATE OBLIGATIONS
(Cost $21,931) 21,106
OTHER MORTGAGE-BACKED OBLIGATIONS--13.2%
Capstead Securities IV 1992-3 B
8.000%, 06/25/22 3,216 3,218
General Electric Capital Mortgage
1995-1 A1
8.350%, 02/25/25 2,444 2,455
Mortgage Capital Funding 1993-C1 A1
5.250%, 05/25/15 $2,624 $ 2,556
Mortgage Capital Funding 1993-C1 A2
6.145%, 05/25/15 (B) 4,606 4,523
Mortgage Obligation Structured Trust
1993-1 A1
6.350%, 10/25/18 1,764 1,739
RTC 1992-11 A1A
7.000%, 10/25/24 1,410 1,396
RTC 1992-C7 B
7.150%, 06/25/23 622 589
TOTAL OTHER MORTGAGE-BACKED OBLIGATIONS
(Cost $16,633) 16,476
U.S. GOVERNMENT AGENCY OBLIGATIONS--0.8%
FNMA
6.340%, 04/16/95 (B) 1,000 999
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $999) 999
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS--0.8%
FHLMC 1625-B
4.750%, 01/15/01 1,000 974
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS
(Cost $1,004) 974
MASTER NOTES--4.7%
Barclays Bank
5.980%, 04/03/95 (C) 1,676 1,676
Goldman Sachs
6.080%, 04/04/95 (C) 946 946
Heller Financial
6.057%, 04/04/95 (C) 3,268 3,268
TOTAL MASTER NOTES
(Cost $5,890) 5,890
REPURCHASE AGREEMENTS--2.4%
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,988,065 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $3,018,603 with rates
ranging from 3.50% to 12.625%,
maturities ranging from 1995 to 2025,
total market value $3,046,581) 2,987 2,987
TOTAL REPURCHASE AGREEMENTS
(Cost $2,987) 2,987
TOTAL INVESTMENTS--103.0%
(Cost $129,988) 128,241
OTHER ASSETS AND LIABILITIES--(3.0%)
OTHER ASSETS AND LIABILITIES, NET (3,738)
NET ASSETS:
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
11,622,763 outstanding
shares $118,537
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 1,056,352
outstanding shares 11,121
Distributions in excess
of net investment
income (42)
Accumulated net
realized loss on
investments (3,366)
Net unrealized
depreciation of
investments (1,747)
TOTAL NET
ASSETS:--100.0% $124,503
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 9.82
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE RETAIL CLASS A $ 9.82
MAXIMUM SALES CHARGE OF
2.00%+ 0.20
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 10.02
</TABLE>
+ The offer price is calculated by dividing the net asset value per share
by 1 minus the maximum sales charge of 2.00%.
(A) Security sold within the terms of a private placement memorandum,
exempt from registration under section 144A of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors". These securities have been determined to
be liquid under the guidelines established by the Board of Directors.
(B) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995.
(C) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset or demand date.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
RTC--Resolution Trust Corporation
(1) At March 31, 1995, the percentage of asset backed securities by
industry was as follows:
AUTO COMPANY SUBSIDIARIES 6.0%
Banks - Boats & Recreational Vehicles 5.0
Banks - Credit Card Receivables 3.3
Banks - Auto 11.4
Business Credit 6.1
Business Credit - Auto 1.8
Consumer Finance - 1st Mortgage 4.7
Consumer Finance - 2nd Mortgage 4.9
Consumer Finance - Auto 3.4
Medical Leases 2.8
Mortgage Bankers & Loans - 2nd
Mortgage 14.7
Total 64.1%
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TERM INCOME FUND
Description Par (000)/Shares Value (000)
U.S. TREASURY OBLIGATIONS--61.3%
U.S. Treasury Bill
5.630%, 04/06/95 $2,945 $2,942
U.S. Treasury Notes
4.375%, 11/15/96 8,805 8,492
5.750%, 10/31/97 7,565 7,357
5.125%, 11/30/98 14,115 13,254
6.375%, 01/15/00 5,230 5,085
6.250%, 02/15/03 13,715 12,917
7.250%, 08/15/04 2,000 2,001
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $52,240) 52,048
OTHER MORTGAGE-BACKED OBLIGATIONS--8.5%
Drexel Burnham Lambert Trust S2
9.000%, 08/01/18 97 101
GECMS 1994-12 A4
6.000%, 04/25/09 2,925 2,695
Kidder Peabody Mortgage Assets Trust 6F
7.950%, 07/20/18 663 667
MDC Mortgage Funding P3
8.200%, 11/20/17 27 27
Morgan Stanley Mortgage Trust W5
9.050%, 05/01/18 182 188
Prudential Home Mortgage Securities
1992-A3
7.000%, 04/25/99 2,100 2,104
Resolution Trust 1991-M6 B2
7.000%, 06/25/21 (B) 1,465 1,447
TOTAL OTHER MORTGAGE-BACKED OBLIGATIONS
(Cost $7,213) 7,229
ASSET BACKED SECURITIES--9.0%
BW Home Equity Trust 1990-1 1
9.250%, 09/15/05 29 29
Chemical Financial Acceptance 1991-A 1
6.450%, 12/15/97 691 676
Fleet Finance Home Equity 1990-1
8.900%, 01/16/06 113 114
Household Finance Home Equity
1993-2 A3
4.650%, 12/20/08 2,539 2,401
Olympic Auto Receivables Trust 1993-D
4.750%, 07/15/00 2,044 1,982
Olympic Auto Receivables Trust 1994-A
5.700%, 01/15/01 465 454
Zale Funding Series 94-1, Class B 144A
7.500%, 05/15/03 (B) 2,000 1,973
TOTAL ASSET BACKED SECURITIES
(Cost $7,807) 7,629
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS--7.2%
FHLMC
6.000%, 11/15/08 $3,500 $3,068
7.550%, 05/15/20 375 374
8.000%, 10/15/20 2,630 2,669
FNMA
14.750%, 03/01/12 1 1
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS
(Cost $6,485) 6,112
CORPORATE OBLIGATIONS--6.3%
Bear Stearns
6.500%, 06/15/00 2,800 2,604
Farmers Group
8.250%, 07/15/96 320 325
GMAC
7.650%, 01/16/98 2,385 2,388
TOTAL CORPORATE OBLIGATIONS
(Cost $5,677) 5,317
MASTER NOTES--3.1%
Goldman Sachs
6.080%, 04/04/95 (A) 2,628 2,628
TOTAL MASTER NOTES
(Cost $2,628) 2,628
REPURCHASE AGREEMENTS--2.9%
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,474,482 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $2,500,361 with rates
ranging from 3.50% to 12.625%,
maturities from 1995 to 2025, total
market value $2,522,940) 2,473 2,473
TOTAL REPURCHASE AGREEMENTS
(Cost $2,473) 2,473
TOTAL INVESTMENTS--98.3%
(Cost $84,523) 83,436
OTHER ASSETS AND LIABILITIES--1.7%
Other Assets and Liabilities, Net 1,402
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
8,516,711 outstanding shares $84,243
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 279,038
outstanding shares 2,830
Distributions in excess of net investment income (19)
Accumulated net realized loss on investments (1,129)
Net unrealized depreciation of investments (1,087)
TOTAL NET ASSETS:--100.0% $84,838
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.65
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 9.65
MAXIMUM SALES CHARGE OF 3.75%+ 0.38
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.03
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 3.75%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Asset is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or the demand date.
(B) Security sold within the terms of a private placement memorandum,
exempt from registration under section 144A of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors". These securities have been determined to
be liquid under the guidelines established by the Board of Directors.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GMAC--General Motors Acceptance Corporation
GECMS--General Electric Capital Marketing Service
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE GOVERNMENT BOND FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. TREASURY OBLIGATIONS--78.3%
U.S. Treasury Notes
6.125%, 07/31/96 $5,000 $4,967
6.250%, 08/31/96 3,000 2,983
6.875%, 10/31/96 3,500 3,507
6.500%, 05/15/97 2,000 1,986
6.500%, 08/15/97 7,000 6,940
7.375%, 11/15/97 2,000 2,020
5.625%, 01/31/98 550 531
7.875%, 04/15/98 6,000 6,146
5.125%, 11/30/98 3,750 3,522
6.375%, 01/15/99 100 98
6.750%, 05/31/99 9,000 8,899
6.875%, 07/31/99 3,000 2,978
7.125%, 09/30/99 8,500 8,516
7.875%, 08/15/01 2,000 2,074
7.500%, 11/15/01 5,250 5,344
7.500%, 05/15/02 2,000 2,039
6.375%, 08/15/02 500 477
6.250%, 02/15/03 500 471
7.250%, 05/15/04 7,250 7,254
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $70,034) 70,752
U.S. GOVERNMENT AGENCY OBLIGATIONS--16.1%
FFCB
6.150%, 06/01/95 3,000 3,000
FHLB
6.200%, 01/22/96 3,000 2,991
7.750%, 04/25/96 510 514
7.750%, 02/26/97 1,000 1,013
7.870%, 12/15/97 3,000 3,041
8.030%, 02/24/98 1,000 1,006
6.975%, 07/26/99 1,000 982
7.440%, 08/10/01 1,000 998
SLMA
6.570%, 05/01/96 1,000 1,010
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost
$14,533) 14,555
REPURCHASE AGREEMENTS--4.0%
J.P. Morgan 6.028%, dated 03/31/95,
matures 04/03/95, repurchase price
$1,113,708 (collateralized by various
U.S. Treasury Interest STRIPS, total
par value $3,529,058 with maturities
ranging from 2000 to 2010, total
market value $1,135,440) 1,113 1,113
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,440,771 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $2,466,297 with rates
ranging from 3.50% to 12.625%,
maturities from 1995 to 2025, total
market value $2,488,569) $2,440 $ 2,440
TOTAL REPURCHASE AGREEMENTS
(Cost $3,553) 3,553
TOTAL INVESTMENTS--98.4%
(Cost $88,120) 88,860
OTHER ASSETS AND LIABILITIES--1.6%
Other Assets and Liabilities, Net 1,475
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
9,788,547 outstanding shares 87,751
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 212,265
outstanding shares 2,009
Distributions in excess of net investment income (16)
Accumulated net realized loss on investments (149)
Net unrealized appreciation of investments 740
TOTAL NET ASSETS:--100.0% $90,335
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.03
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 9.04
MAXIMUM SALES CHARGE OF 3.00%+ 0.28
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 9.32
</TABLE>
+ The offer price is calculated by dividing the net asset value per share
by 1 minus the maximum sales charge of 3.00%.
FFCB--Federal Farm Credit Bank
FHLB--Federal Home Loan Bank
SLMA--Student Loan Marketing Association
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
The accompanying notes are an integral part of the financial statements.
FIXED INCOME FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. TREASURY OBLIGATIONS--64.4%
U.S. Treasury Bill
5.630%, 04/06/95 $ 9,715 $ 9,706
U.S. Treasury Bonds
7.250%, 08/15/22 21,515 20,804
7.125%, 02/15/23 16,350 15,589
U.S. Treasury Notes
4.375%, 11/15/96 24,690 23,812
5.750%, 10/31/97 3,080 2,995
5.125%, 02/28/98 10,000 9,524
5.125%, 11/30/98 10,990 10,320
6.000%, 10/15/99 2,250 2,157
6.375%, 01/15/00 6,000 5,833
6.250%, 02/15/03 10,445 9,837
7.250%, 08/15/04 15,500 15,509
U.S. Treasury STRIPS
0.000% 02/15/99 1,055 808
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $125,147) 126,894
OTHER MORTGAGE-BACKED OBLIGATIONS--10.4%
Collateralized Mortgage Securities
88-13 C
8.000%, 09/20/19 137 139
Countrywide Mortgage-Backed
Securities 1994-GA3
6.500%, 04/25/24 2,380 2,216
Drexel Burnham Lambert Trust S-2
9.000%, 08/01/18 852 882
General Electric Capital Marketing
Services 1994-12 A4
6.000%, 04/25/09 3,125 2,880
General Electric Capital Mortgage
1994-17 A6
7.000%, 05/25/24 7,000 6,568
General Electric Capital Mortgage
1994-11 A1
6.500%, 03/25/24 4,598 4,481
Prudential Home Mortgage Securities
1994-6 A3
7.000%, 04/25/99 900 902
Residential Funding 1992-36 A2 P11
5.700%, 11/25/07 1,224 1,187
Resolution Trust 1991-M6 B2
7.000%, 06/25/21 (B) 1,157 1,143
TOTAL OTHER MORTGAGE-BACKED OBLIGATIONS
(Cost $20,252) 20,398
ASSET BACKED SECURITIES--6.7%
BW Home Equity Trust 1990-1 1
9.250%, 09/15/05 $ 92 $ 94
Corestates Home Equity Trust
1994-2 A2
7.000%, 10/15/09 6,500 6,093
Dillon Reed Structured Finance
1993-K1 A1
6.660%, 08/15/10 591 532
Kidder Peabody Acceptance Brandon
Development
7.870%, 01/01/16 634 559
Kidder Peabody Acceptance Lake Mary
Development
7.870%, 01/01/16 1,309 1,153
Morgan Stanley Mortgage Trust
9.050%, 05/01/18 43 45
Olympic Auto Receivables Trust
1994-A
5.700%, 01/15/01 598 584
Zale Funding 94-1 B
7.500%, 05/15/03 (B) 4,100 4,045
TOTAL ASSET BACKED SECURITIES
(Cost $13,082) 13,105
CORPORATE DEBT OBLIGATIONS--4.4%
Bear Stearns
9.125%, 04/15/98 1,000 1,044
8.750%, 03/15/04 1,000 1,018
Farmers Group
8.250%, 07/15/96 1,755 1,781
General Foods
6.000%, 06/15/01 1,440 1,334
General Motors Acceptence
6.150%, 05/11/98 2,025 1,941
Morgan Stanley Group
7.320%, 01/15/97 250 251
Nationsbank
7.750%, 08/15/04 1,000 985
Torchmark
9.625%, 05/01/98 250 263
TOTAL CORPORATE DEBT OBLIGATIONS
(Cost $8,735) 8,617
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED--3.9%
FHLMC
6.000%, 11/15/08 $1,275 $ 1,118
7.000%, 02/15/24 7,133 6,611
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
(Cost $7,397) 7,729
MASTER NOTES--8.6%
Associates Corporation of North
America
5.920%, 04/04/95 (A) 1,302 1,302
Barclays
5.980%, 04/03/95 (A) 2,625 2,625
Goldman Sachs
6.080%, 04/04/95 (A) 6,101 6,101
Heller Financial
6.057%, 04/04/95 (A) 6,955 6,956
TOTAL MASTER NOTES
(Cost $16,984) 16,984
TOTAL INVESTMENTS--98.4%
(Cost $191,597) 193,727
OTHER ASSETS AND
LIABILITIES--1.6%
Other Assets and Liabilities, Net 3,238
NET ASSETS:
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 17,916,883 outstanding shares 188,660
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on
653,532 outstanding shares 7,234
Portfolio shares--Retail Class B ($.0001)
par value--2 billion authorized) based on
146,434 outstanding shares 1,534
Distributions in excess of net investment
income (192)
Accumulated net realized loss on investments (2,401)
Net unrealized appreciation of investments 2,130
TOTAL NET ASSETS:--100.0% $196,965
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 10.52
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL A $ 10.53
MAXIMUM SALES CHARGE OF 3.75%+ 0.41
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.94
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 10.50
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 3.75%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or the demand date.
(B) Security sold within the terms of a private placement memorandum,
exempt from registration under section 144A of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors." These securities have been determined to
be liquid under guidelines established by the Board of Directors.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
MORTGAGE SECURITIES FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS--75.7%
FHLMC
7.250%, 12/01/98 $118 $112
7.750%, 10/01/01 83 81
8.500%, 10/01/01 64 65
8.500%, 05/15/05 392 394
7.400%, 10/15/05 1,550 1,504
6.250%, 12/15/06 1,000 929
6.500%, 09/01/07 246 225
8.000%, 04/01/08 305 300
8.000%, 10/01/08 151 149
6.000%, 11/15/08 615 539
8.750%, 09/01/09 418 422
8.500%, 01/01/10 131 131
14.500%, 02/01/11 2 2
8.000%, 06/01/16 99 98
9.000%, 07/01/16 61 62
8.000%, 10/01/16 152 150
7.500%, 11/01/16 103 99
5.000%, 11/15/17 1,500 1,374
FNMA
8.000%, 08/01/96 6 6
8.670%, 06/01/97 (B) 20 19
6.000%, 10/25/98 1,404 1,375
5.750%, 11/25/98 1,103 1,070
8.000%, 05/01/08 212 210
6.000%, 06/25/08 1,300 1,120
7.000%, 11/25/10 170 166
14.750%, 03/01/12 59 68
5.900%, 07/25/15 1,500 1,401
8.250%, 07/25/15 1,221 1,229
8.500%, 01/01/17 188 190
7.500%, 04/01/18 134 130
8.500%, 08/25/18 700 712
7.000%, 10/25/19 1,500 1,416
6.750%, 11/25/19 1,000 953
5.000%, 05/25/23 1,400 1,268
GNMA
10.250%, 05/15/98 52 56
10.750%, 09/15/98 42 46
10.750%, 10/15/00 119 129
10.750%, 01/15/01 111 121
6.500%, 06/15/03 164 149
8.000%, 08/15/06 127 126
8.000%, 08/15/07 193 191
8.500%, 07/15/08 37 38
8.500%, 08/15/08 267 271
9.500%, 08/15/09 14 14
14.000%, 10/15/12 9 11
12.000%, 03/15/14 59 66
12.000%, 03/15/15 $ 28 $ 31
12.000%, 04/15/15 26 29
12.000%, 06/15/15 47 53
10.000%, 03/15/16 38 41
9.500%, 09/15/16 193 203
9.000%, 10/15/16 19 20
9.000%, 02/15/17 408 421
9.500%, 11/15/18 425 446
6.500%, 02/16/23 2,297 1,957
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS
(Cost $23,235) 22,388
OTHER MORTGAGE-BACKED OBLIGATIONS--14.9%
American Housing Trust 3 B
7.500%, 08/25/12 1,250 1,241
Bear Stearns Secured Investors Trust
1991-2 E
7.500%, 12/20/98 1,500 1,501
Collateralized Mortgage Obligation
Trust 63 D
9.000%, 04/20/97 1,179 1,195
Morgan Stanley Mortgage Trust W 5
9.050%, 05/01/18 463 479
TOTAL OTHER MORTGAGE-BACKED OBLIGATIONS
(Cost $4,474) 4,416
U.S. TREASURY OBLIGATIONS (4.0%)
U.S. Treasury Bond
7.125%, 02/15/23 700 668
U.S. Treasury Note
7.250%, 08/15/04 500 500
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,154) 1,168
MASTER NOTES--4.2%
Goldman Sachs
6.080%, 04/04/95 (A) 984 984
Heller Financial
6.057%, 04/04/95 (A) 244 244
TOTAL MASTER NOTES
(Cost $1,228) 1,228
REPURCHASE AGREEMENTS--0.9%
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$264,864 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $267,571, with rates
ranging from 3.50% to 12.625%, and
maturities from 1995 to 2025, total
market value $270,051) $265 $ 265
TOTAL REPURCHASE AGREEMENTS
(Cost $265) 265
TOTAL INVESTMENTS--99.7%
(Cost $30,356) 29,465
OTHER ASSETS AND LIABILITIES--0.3%
Other Assets and Liabilities, Net 104
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
2,984,044 outstanding shares 30,265
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 26,314
outstanding shares 266
Distributions in excess of net investment
income (9)
Accumulated net realized loss on investments (62)
Net unrealized depreciation of investments (891)
TOTAL NET ASSETS:--100.0% $29,569
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 9.82
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 9.82
MAXIMUM SALES CHARGE OF 3.75%+ 0.38
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.20
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 3.75%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or demand date.
(B) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
The accompanying notes are an integral part of the financial statements.
ASSET ALLOCATION FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--54.6%
AEROSPACE & DEFENSE--0.5%
E Systems 300 $ 14
Lockheed Martin* 1,252 66
Loral 400 17
Raytheon 800 58
Rockwell International 1,400 55
210
AGRICULTURE--0.0%
Pioneer Hi-Bred International 500 18
AIR TRANSPORTATION--0.2%
AMR* 400 26
Delta Air Lines 300 19
Federal Express* 300 20
Southwest Airlines 900 16
U.S. Air Group* 1,900 12
93
AIRCRAFT--0.9%
AlliedSignal 1,800 71
Boeing 2,100 113
General Dynamics 400 19
McDonnell Douglas 700 39
Northrop 200 10
Teledyne 500 13
Textron 500 28
United Technologies 900 62
355
APPAREL/TEXTILES--0.1%
Liz Claiborne 700 12
Russell 400 12
V.F. 400 22
46
AUTOMOTIVE--1.4%
Chrysler 2,200 92
Dana 600 15
Eaton 600 33
Echlin 400 15
Fleetwood Enterprises 500 12
Ford Motor 6,300 170
General Motors 4,700 208
Paccar 300 13
TRW 400 28
586
BANKS--3.1%
Banc One 2,552 73
Bank of Boston 900 27
BankAmerica 2,300 110
Bankers Trust New York 600 31
Barnett Banks 500 $ 23
Boatmens Bancshares 500 15
Chase Manhattan 1,100 39
Chemical Banking 1,500 57
Citicorp 2,400 102
CoreStates Financial 900 29
First Chicago 600 30
First Fidelity Bancorp 500 25
First Interstate Bancorp 500 40
First Union 1,100 48
Fleet Financial Group 800 26
Golden West Financial 400 15
Great Western Financial 800 15
H.F. Ahmanson 700 13
J.P. Morgan 1,200 73
KeyCorp 1,500 42
MBNA 900 26
Mellon Bank 900 37
National City 900 24
Nationsbank 1,700 86
NBD Bancorp 1,200 39
Norwest 1,900 48
PNC Bank 1,300 32
Shawmut National 700 18
Suntrust Banks 700 37
U.S. Bancorp 800 21
Wachovia 1,100 39
Wells Fargo 300 47
1,287
BEAUTY PRODUCTS--1.0%
Avon Products 400 24
Colgate-Palmolive 900 59
Ecolab 500 12
International Flavors & Fragrances 700 36
Procter & Gamble 4,300 286
417
BROADCASTING, NEWSPAPERS & ADVERTISING--0.8%
Capital Cities ABC 1,000 88
CBS 425 27
Comcast, Class A 1,500 23
Interpublic Group 500 19
Tele-Communications, Class A* 3,800 80
Viacom, Class B* 2,215 99
336
BUILDING & CONSTRUCTION--0.2%
Fluor 500 24
Foster Wheeler 300 10
Halliburton 700 26
Owens Corning Fiberglass* 300 11
71
BUSINESS SUPPLIES--0.1%
W.W. Grainger 400 25
CHEMICALS--1.9%
Air Products & Chemical 700 $ 36
Dow Chemical 1,700 124
E.I. du Pont de Nemours 4,200 254
Eastman Chemical 500 28
First Mississippi 500 13
FMC* 300 18
Great Lakes Chemical 400 25
Hercules 700 33
Monsanto 700 56
Morton International 800 23
Nalco Chemical 600 20
PPG Industries 1,300 49
Praxair 700 16
Rohm & Haas 400 24
Union Carbide 800 25
W.R. Grace 600 32
776
COMMUNICATIONS EQUIPMENT--0.8%
Andrew* 300 12
DSC Communications* 600 20
General Signal 300 11
Harris 300 14
Motorola 3,800 207
Northern Telecom 1,600 61
Scientific-Atlanta 500 12
337
COMPUTERS & SERVICES--1.7%
Apple Computer 700 25
Ceridian* 400 13
Compaq Computer* 1,600 55
Digital Equipment* 900 34
Hewlett Packard 1,600 193
IBM 3,600 295
Pitney Bowes 1,000 36
Silicon Graphics* 900 32
Tandem Computers* 800 12
Tandy 400 19
Unisys* 1,200 11
725
CONTAINERS & PACKAGING--0.1%
Crown Cork & Seal* 500 22
Newell 1,200 31
53
DRUGS--4.0%
Abbott Laboratories 5,000 178
Allergan 400 12
Alza, Class A* 600 13
American Home Products 1,900 $ 135
Amgen* 800 54
Bristol-Myers Squibb 3,200 202
Eli Lilly 1,800 132
Johnson & Johnson 4,000 238
Mallinckrodt Group 400 14
Merck 7,800 331
Pfizer 2,000 172
Schering Plough 1,200 89
Upjohn 1,100 39
Warner Lambert 800 63
1,672
ELECTRICAL SERVICES--2.1%
American Electric Power 1,100 35
Baltimore Gas & Electric 1,200 28
Carolina Power & Light 900 24
Central & South West 1,100 27
Cinergy 1,000 25
Consolidated Edison New York 1,300 35
Detroit Edison 800 22
Dominion Resources of Virginia 1,000 36
Duke Power 1,300 50
Entergy 1,400 29
FPL Group 1,100 40
General Public Utilities 700 20
Houston Industries 800 31
Niagara Mohawk Power 700 10
Northern States Power 400 18
Ohio Edison 1,000 20
Pacific Gas & Electric 2,700 67
Pacificorp 1,800 35
PECO Energy 1,200 30
Public Service Enterprise Group 1,400 38
Raychem 300 12
SCEcorp 2,700 42
Southern 4,100 84
Texas Utilities 1,400 44
Thomas & Betts 200 13
Unicom 1,300 31
Union Electric 500 18
864
ENTERTAINMENT--0.5%
Promus* 650 24
Walt Disney 3,300 177
201
ENVIRONMENTAL SERVICES--0.3%
Browning Ferris Industries 1,100 37
WMX Technologies 3,000 83
120
FINANCIAL SERVICES--1.2%
American Express 3,100 108
Beneficial 400 $ 16
Dean Witter Discover 1,046 43
FHLMC 1,100 67
FNMA 1,700 138
H & R Block 600 26
Household International 600 26
Merrill Lynch 1,200 51
Transamerica 428 24
499
FOOD, BEVERAGE & TOBACCO--4.9%
Adolph Coors, Class B 700 11
American Brands 1,300 51
Anheuser Busch 1,600 94
Archer Daniels Midland 3,536 66
Brown Forman, Class B 300 10
Campbell Soup 1,500 73
Coca Cola 8,000 449
ConAgra 1,500 50
CPC International 900 49
General Mills 1,000 60
H.J. Heinz 1,500 58
Hershey Foods 500 26
Kellogg 1,400 82
PepsiCo 4,900 191
Philip Morris 5,300 345
Quaker Oats 700 23
Ralston Purina Group 600 29
Sara Lee 3,000 78
Seagram 2,300 73
Unilever N.V. (ADR) 1,000 131
UST 1,300 41
Whitman 700 13
William Wrigley Jr. 700 31
2,034
GAS/NATURAL GAS--0.5%
Coastal 500 14
Columbia Gas Systems* 400 12
Consolidated Natural Gas 600 23
Enron 1,600 53
Noram Energy 2,000 11
Oneok 600 11
Pacific Enterprises 600 15
Panhandle Eastern 900 21
Peoples Energy 400 10
Sonat 600 18
Williams 600 18
206
GLASS PRODUCTS--0.1%
Corning 1,400 50
HOTELS & LODGING--0.1%
Hilton Hotels 300 $ 22
HOUSEHOLD FURNITURE & FIXTURES--0.1%
Masco 900 25
HOUSEHOLD PRODUCTS--0.5%
Clorox 300 18
Gillette 1,400 114
Maytag 700 12
National Service Industries 400 11
Sherwin Williams 500 17
Snap-On Tools 300 11
Stanley Works 400 16
Whirlpool 500 27
226
INSURANCE--2.0%
Aetna Life & Casualty 700 40
Alexander & Alexander Services 500 12
American General 1,300 42
American International Group 1,950 202
Chubb 500 40
Cigna 400 30
Continental 600 12
General Re 500 66
Jefferson-Pilot 300 18
Lincoln National 600 24
Marsh & McLennan 400 33
Providian 600 21
Safeco 400 22
St. Paul 500 25
Torchmark 400 17
Travelers 2,035 79
U.S. Healthcare 1,000 44
U.S. Life 300 11
United Healthcare 1,000 47
Unum 1,200 54
USF&G 800 11
850
JEWELRY, PRECIOUS METALS--0.0%
Jostens 500 10
LUMBER & WOOD PRODUCTS--0.1%
Louisiana Pacific 800 22
MACHINERY--2.7%
Baker Hughes 900 18
Black & Decker 700 20
Brunswick 700 14
Caterpillar 1,300 72
Crane 400 12
Cummins Engine 200 $ 9
Deere 500 41
Dover 400 26
Dresser Industries 1,000 21
Emerson Electric 1,400 93
General Electric 10,600 575
Harnischfeger Industries 400 11
Ingersoll Rand 800 26
McDermott International 400 11
Pall 1,000 21
Parker Hannifin 400 18
Tenneco 1,100 52
Texas Instruments 600 53
Timken 300 11
Tyco International 400 21
Varity* 300 11
1,136
MEASURING DEVICES--0.1%
Honeywell 800 30
Johnson Controls 300 15
Millipore 200 11
56
MEDICAL PRODUCTS & SERVICES--0.8%
Bausch & Lomb 300 11
Baxter International 1,800 59
Becton Dickinson 400 22
Beverly Enterprises* 800 12
Biomet* 900 15
Boston Scientific* 900 22
C.R. Bard 400 11
Columbia/HCA Healthcare 2,237 96
Manor Care 400 12
Medtronic 700 49
National Medical Enterprises 1,000 16
St. Jude Medical 400 17
United States Surgical 500 11
353
METALS & MINING--0.0%
Cyprus AMAX Minerals 450 13
MISCELLANEOUS BUSINESS SERVICES--1.6%
Autodesk 300 13
Automatic Data Processing 900 57
Cisco Systems* 1,600 61
Computer Associates International 1,000 59
Computer Sciences* 300 15
First Data 700 36
Lotus Development* 400 15
Microsoft 3,600 256
Novell* 2,100 $ 40
Ogden 500 10
Oracle Systems* 2,700 84
Safety Kleen 700 13
Sun Microsystems* 600 21
680
MISCELLANEOUS CONSUMER SERVICES--0.0%
Service International 600 17
MULTI-INDUSTRY--0.6%
Dial 400 10
ITT 700 72
Minnesota Mining & Manufacturing 2,600 151
233
NATURAL GAS TRANSMISSION AND
DISTRIBUTION--0.1%
Enserch 800 12
Nicor 400 10
22
OIL -- DOMESTIC--0.8%
Ashland Oil 300 11
Atlantic Richfield 1,000 115
Kerr-McGee 300 15
Louisiana Land & Exploration 400 15
Pennzoil 200 9
Phillips Petroleum 1,600 59
Sun 700 20
Unocal 1,500 43
USX-Marathon Group 1,800 32
319
OIL -- INTERNATIONAL--4.2%
Amerada Hess 500 25
Amoco 3,100 197
Chevron 4,000 192
Exxon 7,700 513
Mobil 2,500 232
Royal Dutch Petroleum (ADR) 3,300 396
Santa Fe Energy Resources 1,200 12
Schlumberger 1,500 89
Texaco 1,600 106
1,762
PAPER & PAPER PRODUCTS--1.0%
Avery Dennison 400 16
Bemis 400 12
Boise Cascade 300 10
Champion International 600 26
Georgia Pacific 500 40
International Paper 800 61
James River 500 $ 13
Kimberly Clark 1,000 52
Mead 400 21
Scott Paper 400 36
Stone Container 700 16
Temple Inland 300 13
Union Camp 500 26
Westvaco 300 12
Weyerhaeuser 1,300 51
405
PAPER MILLS--0.0%
Potlatch 300 13
PETROLEUM & FUEL PRODUCTS--0.3%
Burlington Resources 800 33
Helmerich & Payne 400 11
Occidental Petroleum 2,000 43
Oryx Energy 1,000 13
Western Atlas* 300 13
113
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--0.5%
Eastman Kodak 2,100 112
Polaroid 300 10
Xerox 700 82
204
PRECIOUS METALS--0.4%
Barrick Gold 2,200 55
Echo Bay Mines 1,200 12
Homestake Mining 800 15
Newmont Mining 573 24
Placer Dome 1,300 32
Santa Fe Pacific Gold 1,000 13
151
PRINTING & PUBLISHING--0.8%
American Greetings, Class A 600 18
Deluxe 500 14
Dow Jones 600 23
Gannett 900 48
Knight-Ridder 300 17
McGraw Hill 300 22
Moore 800 16
New York Times, Class A 600 14
R.R. Donnelley & Sons 900 31
Time Warner 2,400 90
Times Mirror, Class A 800 15
Tribune 400 22
330
PROFESSIONAL SERVICES--0.1%
Dun & Bradstreet 1,100 $ 58
RAILROADS--0.6%
Burlington Northern 500 30
Consolidated Rail 600 34
CSX 600 47
Norfolk Southern 800 54
Santa Fe Pacific 1,022 24
Union Pacific 1,300 70
259
REAL ESTATE--0.1%
Price Enterprises* 1,704 20
REPAIR SERVICES--0.0%
Ryder System 500 12
RETAIL--3.7%
Albertson's 1,600 52
American Stores 1,000 26
Bruno's 1,100 10
Circuit City 400 11
Dayton Hudson 400 29
Dillard Department Stores 700 19
Gap 900 32
Giant Food 500 12
Harcourt General 500 20
Hasbro 500 17
Home Depot 2,833 125
J.C. Penney 1,400 63
Kmart 2,900 40
Kroger* 700 18
Lowe's 900 31
Luby's Cafeterias 500 11
Mattel 1,375 34
Marriott 800 28
May Department Stores 1,500 56
McDonald's 4,300 147
Melville 700 26
Mercantile Stores 300 13
Nordstrom 500 20
Pep Boys-Manny Moe & Jack 400 12
Rite Aid 600 15
Sears Roebuck 2,200 117
The Limited 2,200 51
TJX 800 11
Toys R Us* 1,800 46
Wal-Mart Stores 14,300 363
Walgreen 700 34
Wendy's International 700 11
Winn Dixie Stores 500 $ 28
Woolworth 600 11
1,539
RUBBER & PLASTIC--0.5%
Armstrong World Industries 200 9
B.F. Goodrich 200 9
Cooper Tire & Rubber 500 14
Goodyear Tire & Rubber 900 33
Illinois Tool Works 600 29
Nike, Class B 400 30
Premark International 400 18
Reebok International 600 21
Rubbermaid 900 30
193
SEMI-CONDUCTORS/INSTRUMENTS--0.9%
Advanced Micro Devices* 600 20
AMP 1,200 43
Intel 2,600 221
Micron Technology 700 53
National Semiconductor* 1,000 18
355
SPECIALTY MACHINERY--0.1%
Cooper Industries 700 27
Westinghouse Electric 2,100 30
57
STEEL & STEEL WORKS--0.6%
Alcan Aluminium 1,400 37
Aluminum Company of America 1,000 41
Asarco 400 11
Bethlehem Steel* 700 11
Englehard 400 12
Inco 700 20
Inland Steel Industries 400 11
Nucor 500 28
Phelps Dodge 400 23
Reynolds Metals 400 20
USX-U.S. Steel Group 600 20
Worthington Industries 750 15
249
TELEPHONES & TELECOMMUNICATION--4.5%
Airtouch Communications* 3,100 84
Alltel 1,200 35
Ameritech 3,400 140
AT&T 9,700 501
Bell Atlantic 2,700 142
Bellsouth 3,100 184
GTE 6,000 200
MCI Communications 4,200 $ 87
NYNEX 2,600 103
Pacific Telesis Group 2,600 79
Southwestern Bell 3,700 156
Sprint 2,200 67
U.S. West 2,800 112
1,890
TRUCKING--0.1%
Pittston Services Group 300 8
Roadway Services 300 15
Yellow 300 5
28
WHOLESALE--0.3%
Alco Standard 300 22
Fleming Companies 600 14
Genuine Parts 700 27
Salomon 600 20
Sigma Aldrich 300 12
Supervalu 400 11
Sysco 1,000 26
132
TOTAL COMMON STOCKS
(Cost $20,363) 22,735
U.S. TREASURY OBLIGATIONS--12.7%
U.S. Treasury Note
7.250%, 05/15/04 $5,275 5,278
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,057) 5,278
MASTER NOTES--13.1%
Barclays
5.980%, 04/03/95 (A) 1,771 1,771
Goldman Sachs
6.080%, 04/04/95 (A) 1,706 1,706
Heller Financial
6.057%, 04/04/95 (A) 1,989 1,989
TOTAL MASTER NOTES
(Cost $5,466) 5,466
REPURCHASE AGREEMENTS--17.8%
J.P. Morgan 6.028%, dated 03/31/95,
matures 04/03/95, repurchase price
$3,624,662 (collateralized by various
U.S. Treasury Interest STRIPS, total
par value $11,485,633, with
maturities ranging from 2000 to 2010,
total market value $3,695,390) 3,623 3,623
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$3,813,800 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $3,852,777, with rates
ranging from 3.500% to 12.625%, and
maturities from 1995 to 2025, total
market value $3,888,487) $3,812 $ 3,812
TOTAL REPURCHASE AGREEMENTS
(Cost $7,435) 7,435
TOTAL INVESTMENTS--98.2%
(Cost $38,321) 40,914
OTHER ASSETS AND LIABILITIES--1.8%
Other Assets and Liabilities, Net 761
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
3,831,926 outstanding shares $38,070
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 66,370
outstanding shares 663
Portfolio shares--Retail Class B ($.0001
par value--2 billion authorized) based
on 19,104 outstanding shares 199
Undistributed net investment income 33
Accumulated net realized gain on investments 117
Net unrealized appreciation of investments 2,593
TOTAL NET ASSETS:--100.0% $41,675
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 10.64
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 10.64
MAXIMUM SALES CHARGE OF 4.50%+ 0.50
OFFERING PRICE PER SHARE--RETAIL CLASS B $ 11.14
NET ASSET VALUE AND OFFERING PRICE
PER SHARE--RETAIL CLASS B (1) $ 10.61
</TABLE>
* Non-income producing security
+ The offering price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or demand date.
ADR--American Depository Receipt
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
BALANCED FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--56.0%
APPAREL--0.9%
Reebok International 41,800 $1,489
AUTOMOTIVE--1.7%
Automotive Industries* 46,500 1,023
General Motors 39,900 1,766
2,789
BANKS--2.3%
BayBanks 28,600 1,845
Chemical Banking 52,900 1,997
3,842
BUILDING & CONSTRUCTION SUPPLIES--0.4%
Griffon* 71,100 604
BUSINESS SUPPLIES--0.6%
W.W. Grainger 16,700 1,052
CHEMICALS--1.5%
Ferro 36,500 926
Hercules 34,000 1,585
2,511
COMPUTERS & SERVICES--3.6%
Compaq Computer* 30,600 1,056
Hewlett Packard 21,000 2,528
IBM 29,000 2,374
5,958
DRUGS--3.2%
American Home Products 30,900 2,202
Bristol-Myers Squibb 24,400 1,537
Upjohn 42,500 1,519
5,258
FOOD, BEVERAGE & TOBACCO--3.6%
ConAgra 78,400 2,597
Dole Food 58,900 1,708
Sara Lee 65,200 1,703
6,008
HOME APPLIANCES--1.1%
Whirlpool 31,700 1,736
INSURANCE--3.9%
AMBAC 43,700 1,775
General Re 14,600 1,927
Providian 48,000 1,686
Western National 84,200 1,053
6,441
MACHINERY--4.9%
Case Equipment 80,600 2,015
Caterpillar 22,000 1,224
Deere 23,200 1,885
General Electric 56,000 3,031
8,155
METALS & MINING--0.9%
Aluminum Company of America 36,000 1,490
MULTI-INDUSTRY--2.7%
ITT 25,400 $2,607
Minnesota Mining & Manufacturing 33,100 1,924
4,531
OFFICE PRODUCTS--1.0%
Xerox 14,500 1,702
OIL-DOMESTIC--1.2%
Unocal 68,800 1,978
OIL-INTERNAITONAL--5.3%
Exxon 23,100 1,542
Mobil 27,300 2,529
Royal Dutch Petroleum(ADR) 25,600 3,069
Texaco 23,100 1,536
8,676
PAPER & PAPER PRODUCTS--3.2%
Bemis 66,900 1,965
James River 66,700 1,734
Scott Paper 16,800 1,502
5,201
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--1.5%
Eastman Kodak 47,400 2,518
RAILROADS--1.9%
CSX 27,200 2,142
Southern Pacific Rail* 56,500 989
3,131
REAL ESTATE INVESTMENT TRUSTS--3.1%
Debartolo Realty 100,300 1,417
Duke Realty Investments 36,900 978
Equity Residential Properties Trust 36,000 936
Simon Property Group 71,300 1,738
5,069
RETAIL--3.0%
Dayton Hudson 24,200 1,731
Gap 29,100 1,033
Sears Roebuck 19,600 1,046
Wal-Mart Stores 41,900 1,068
4,878
SEMICONDUCTORS & RELATED DEVICES--2.3%
AMP 28,000 1,008
Texas Instruments 30,900 2,735
3,743
SPECIALTY MACHINERY--0.6%
York International 25,900 1,023
TELEPHONES & TELECOMMUNICATION--1.6%
Century Telephone Enterprises 30,600 929
GTE 53,800 1,789
2,718
TOTAL COMMON STOCKS (Cost $80,586) 92,501
U.S. TREASURY OBLIGATIONS--26.5%
U.S. Treasury Bill
5.635%, 04/06/95 $ 3,000 $ 2,997
U.S. Treasury Bonds
7.250%, 08/15/22 10,100 9,765
7.125%, 02/15/23 1,575 1,502
U.S. Treasury Notes
4.375%, 11/15/96 8,950 8,632
5.750%, 10/31/97 4,740 4,610
5.125%, 11/30/98 5,810 5,456
6.375%, 01/15/00 2,700 2,625
6.250%, 02/15/03 5,360 5,048
7.250%, 08/15/04 2,875 2,877
U.S. Treasury STRIP
0.000% 02/15/99 265 203
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $43,994) 43,715
CORPORATE OBLIGATIONS--4.7%
Bear Stearns
9.125%, 04/15/98 770 804
8.750%, 03/15/04 1,150 1,170
Farmers Group
8.250%, 07/15/96 1,045 1,061
General Foods
6.000%, 06/15/01 860 797
General Motors Acceptance
7.650%, 01/16/98 2,375 2,377
Torchmark
7.875%, 05/15/23 1,700 1,545
TOTAL CORPORATE OBLIGATIONS
(Cost $8,170) 7,754
U.S. GOVERNMENT AGENCY OBLIGATIONS--3.9%
FHLMC
6.250%, 12/15/06 1,725 1,602
6.000%, 11/15/08 2,700 2,367
FNMA
5.450%, 02/20/22 2,700 2,460
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,995) 6,429
OTHER MORTGAGE-BACKED OBLIGATIONS--3.8%
Drexel Burnham Lambert CMO Trust S 2
9.000%, 08/01/18 $ 507 $ 525
GE Capital Mortgage Services 1994-11 A1
6.500%, 03/25/24 1,931 1,882
GE Capital Mortgage Services 1994-17 A6
7.000%, 05/25/24 2,675 2,510
Residential Funding 1992-36 A2
5.700%, 11/25/07 729 707
Resolution Trust 1991-M6 (B)
7.000%, 06/25/21 586 579
TOTAL OTHER MORTGAGE-BACKED OBLIGATIONS
(Cost $6,083) 6,203
ASSET BACKED SECURITIES--1.1%
BW Home Equity Trust Pool 1990-1 A
9.250%, 09/15/05 51 53
Household Finance 1993-2 A3
4.650%, 12/20/08 1,890 1,786
TOTAL ASSET BACKED SECURITIES
(Cost $1,938) 1,839
MASTER NOTES--2.3%
Heller Financial
6.057%, 04/04/95 (A) 3,828 3,828
TOTAL MASTER NOTES
(Cost $3,828) 3,828
REPURCHASE AGREEMENTS--0.9%
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$1,514,471 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $1,529,948 with rates
ranging from 3.500% to 12.625%,
maturities from 1995 to 2025, total
market value $1,544,129) 1,514 1,514
TOTAL REPURCHASE AGREEMENTS
(Cost $1,514) 1,514
TOTAL INVESTMENTS--99.2%
(Cost $153,109) 163,783
OTHER ASSETS AND LIABILITIES--0.8%
Other Assets and Liabilities, Net 1,273
NET ASSETS:
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
13,629,746 outstanding
shares $140,537
Portfolio
shares--Retail Class A
($.0001 par value--2
billion authorized)
based on 1,228,874
outstanding shares 12,726
Portfolio
shares--Retail Class B
($.0001 par value--2
billion authorized)
based on 76,590
outstanding shares 813
Undistributed net
investment income 215
Accumulated net
realized gain on
investments 90
Net unrealized
appreciation of
investments 10,675
TOTAL NET
ASSETS:--100.0% $165,056
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL
CLASS $ 11.05
NET ASSET VALUE, AND
REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $11.04
MAXIMUM SALES CHARGE OF 4.50%+ 0.52
OFFERING PRICE PER
SHARE--RETAIL CLASS A $11.56
NET ASSET VALUE AND
OFFERING PRICE
PER SHARE--RETAIL CLASS B (1) $11.03
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or demand date.
(B) Security sold within terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors." These securities have been determined to be
liquid under the guidelines established by the Board of Directors.
ADR--American Depository Receipt
AMBAC--American Municipal Bond Assurance Company
CMO--Collateralized Mortgage Obligation
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
LIMITED VOLATILITY STOCK FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--86.2%
AEROSPACE & DEFENSE--2.4%
Lockheed Martin 7,000 $ 370
BANKS--6.5%
Bank of New York 10,000 329
Boatmen's Bancshares 11,300 341
Wachovia 9,600 341
1,011
CHEMICALS--2.1%
PPG Industries 8,500 321
COMMERCIAL SERVICES--2.1%
Rollins 12,050 331
COMPUTERS & SERVICES--2.2%
IBM 4,200 344
DRUGS--9.3%
American Home Products 5,100 363
Eli Lilly 5,000 365
Mallinckrodt Group 10,800 365
Merck 8,400 358
1,451
ELECTRICAL SERVICES--7.9%
Delmarva Power & Light 16,200 320
Montana Power 13,700 312
Rochester Gas & Electric 13,500 278
Southwestern Public Service 11,600 323
1,233
FOOD, BEVERAGE & TOBACCO--4.4%
Hershey Foods 6,500 332
UST 11,100 353
685
HOUSEHOLD PRODUCTS--2.4%
Clorox 6,300 378
INSURANCE--2.2%
Aon 9,650 352
MACHINERY--6.5%
Dresser Industries 14,800 315
General Electric 6,200 336
McDermott International 13,300 363
1,014
MEDICAL PRODUCTS & SERVICES--2.4%
Baxter International 11,600 380
METALS & MINING--1.4%
Vulcan Materials 3,800 219
MULTI-INDUSTRY--2.2%
Harsco 8,000 $ 352
OIL - INTERNATIONAL--8.1%
Amoco 7,300 464
Chevron 9,100 437
Mobil 4,000 371
1,272
PETROLEUM & FUEL PRODUCTS--2.2%
Questar 11,700 351
PRECIOUS METALS--2.4%
Barrick Gold 14,800 370
Santa Fe Pacific Gold* 300 4
374
PRINTING & PUBLISHING--1.7%
Banta 8,100 267
RETAIL--6.3%
Albertson's 10,800 347
Luby's Cafeterias 14,000 298
J.C. Penney 7,500 337
982
SEMI-CONDUCTORS/INSTRUMENTS--1.3%
Intel 2,400 204
STEEL & STEEL WORKS--4.0%
Carpenter Technology 5,600 323
Phelps Dodge 5,200 296
619
TELEPHONES & TELECOMMUNICATION--2.3%
U.S. West 8,800 352
TRUCKING--1.4%
Yellow 14,100 226
WHOLESALE--2.5%
Genuine Parts 9,875 394
TOTAL COMMON STOCKS
(Cost $12,618) 13,482
U.S. TREASURY OBLIGATIONS--9.6%
U.S. Treasury Bill
5.480%, 04/06/95 $ 1,504 $ 1,503
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,500) 1,503
MONEY MARKET--2.8%
Aim Short Term Prime Obligation
6.120%, 04/07/95 (A) 443,532 444
TOTAL MONEY MARKET
(Cost $444) 444
TOTAL INVESTMENTS--98.6%
(Cost $14,561) 15,429
OTHER ASSETS AND LIABILITIES--1.4%
Other Assets and Liabilities, Net 213
NET ASSETS:
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 1,472,550 outstanding shares 14,728
Undistributed net investment income 4
Accumulated net realized gain on
investments 42
Net unrealized appreciation of investments 868
TOTAL NET ASSETS:--100.0% $15,642
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 10.62
</TABLE>
* Non-income producing security
(A) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995. The date shown is
the longer of the reset or demand date.
The accompanying notes are an integral part of the financial statements.
EQUITY INDEX FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--94.6%
AEROSPACE & DEFENSE--0.8%
Lockheed Martin* 8,927 $ 472
Loral 3,900 166
Raytheon 6,300 459
Rockwell International 10,200 398
1,495
AGRICULTURE--0.1%
Pioneer Hi-Bred International 3,800 137
AIR TRANSPORTATION--0.4%
AMR* 3,500 226
Delta Air Lines 2,100 132
Federal Express* 2,300 156
Southwest Airlines 7,000 125
U.S. Air Group* 5,100 31
670
AIRCRAFT--1.5%
AlliedSignal 12,800 502
Boeing 15,800 851
General Dynamics 2,800 132
McDonnell Douglas 6,000 335
Northrop 1,700 83
Teledyne 3,700 97
Textron 4,300 243
United Technologies 6,900 477
2,720
APPAREL/TEXTILES--0.2%
Hartmarx* 4,300 23
Liz Claiborne 2,500 44
Oshkosh B'Gosh, Class A 2,600 37
Russell 1,200 36
Springs Industries 1,100 41
V.F. 2,600 138
319
AUTOMOTIVE--2.4%
Chrysler 17,200 720
Dana 4,400 112
Eaton 4,200 228
Echlin 3,200 123
Fleetwood Enterprises 2,600 61
Ford Motor 48,800 1,318
General Motors 34,400 1,522
Navistar International* 2,600 33
Paccar 1,495 64
TRW 3,100 214
4,395
BANKS--5.4%
Banc One 19,767 563
Bank of Boston 4,300 128
BankAmerica 17,900 864
Bankers Trust New York 3,900 204
Barnett Banks 4,100 $ 187
Boatmens Bancshares 5,200 157
Chase Manhattan 8,600 306
Chemical Banking 12,300 464
Citicorp 18,000 765
CoreStates Financial 6,000 192
First Chicago 3,900 195
First Fidelity Bancorp 3,500 173
First Interstate Bancorp 3,900 308
First Union 7,400 321
Fleet Financial Group 6,000 194
Golden West Financial 3,000 115
Great Western Financial 6,800 128
H.F. Ahmanson 5,900 106
J.P. Morgan 9,400 573
KeyCorp 11,100 314
MBNA 6,900 200
Mellon Bank 7,050 287
Nationsbank 13,100 665
NBD Bancorp 7,200 234
Norwest 13,000 330
PNC Bank 12,300 300
Shawmut National 7,800 206
Suntrust Banks 6,000 321
U.S. Bancorp 4,300 112
Wachovia 7,400 263
Wells Fargo 2,700 422
9,597
BEAUTY PRODUCTS--1.7%
Avon Products 3,500 212
Colgate Palmolive 7,700 508
Dial 3,200 81
Ecolab 3,200 78
Procter & Gamble 31,700 2,100
2,979
BUSINESS SUPPLIES--0.1%
W.W. Grainger 2,000 126
BROADCASTING, NEWSPAPERS &
ADVERTISING--1.1%
Capital Cities ABC 7,000 618
CBS 2,540 163
Comcast 10,200 159
Interpublic Group 2,600 97
Tele-Communications, Class A* 28,100 590
Viacom, Class B 7,091 317
1,944
BUILDING & CONSTRUCTION--0.4%
Centex 1,600 39
Fluor 3,900 188
Foster Wheeler 3,400 115
Halliburton 4,700 $ 171
Kaufman & Broad Home 7,800 93
Pulte 1,800 42
648
CHEMICALS--3.3%
Air Products & Chemical 5,200 271
B.F. Goodrich 1,000 44
Dow Chemical 13,400 978
E.I. du Pont de Nemours 31,500 1,906
Eastman Chemical 3,875 216
FMC* 1,500 91
Great Lakes Chemical 3,500 218
Hercules 6,900 322
International Flavors & Fragrances 4,800 248
Monsanto 5,400 433
Morton International 7,800 226
Nalco Chemical 3,400 114
Praxair 8,400 195
Rohm & Haas 2,800 165
Union Carbide 7,400 227
W.R. Grace 4,300 229
5,883
COMMUNICATIONS EQUIPMENT--1.3%
DSC Communications* 6,000 195
Harris 1,800 86
Motorola 27,100 1,481
Northern Telecom 11,200 424
Scientific-Atlanta 3,800 89
Zenith Electronics* 3,200 25
2,300
COMPUTERS & SERVICES--3.1%
Apple Computer 5,700 201
Ceridian* 3,500 117
Compaq Computer* 12,300 424
Cray Research* 3,000 55
Data General* 5,800 43
Digital Equipment* 6,300 239
Hewlett Packard 11,900 1,432
Intergraph* 13,100 156
IBM 27,100 2,217
Pitney Bowes 7,100 256
Tandem Computers* 5,200 81
Tandy 4,080 195
Unisys* 5,600 52
5,468
CONCRETE & MINERAL PRODUCTS--0.0%
Owens Corning Fiberglass* 1,500 54
CONSUMER PRODUCTS--0.0%
Brown Group 2,000 58
CONTAINERS & PACKAGING--0.2%
Ball 1,900 $ 65
Crown Cork & Seal* 4,100 180
Newell 7,200 184
429
DRUGS--7.1%
Abbott Laboratories 38,700 1,379
Allergan 2,200 65
Alza, Class A* 2,600 55
American Home Products 14,600 1,040
Amgen* 6,500 438
Bristol-Myers Squibb 23,600 1,487
Eli Lilly 14,100 1,031
Johnson & Johnson 29,700 1,767
Mallinckrodt Group 3,000 101
Merck 59,600 2,541
Pfizer 14,400 1,235
Schering Plough 9,300 692
Upjohn 7,900 282
Warner Lambert 6,300 493
12,606
ELECTRICAL SERVICES--3.5%
American Electric Power 8,300 264
Baltimore Gas & Electric 7,300 172
Carolina Power & Light 7,600 206
Central & South West 8,700 211
Cinergy 3,273 81
Consolidated Edison New York 10,400 283
Detroit Edison 6,800 186
Dominion Resources of Virginia 7,400 266
Duke Power 10,400 400
Entergy 10,800 225
FPL Group 8,600 313
Houston Industries 5,800 221
Niagara Mohawk Power 6,000 83
Northern States Power 2,700 119
Ohio Edison 7,600 152
Pacific Gas & Electric 20,000 498
Pacificorp 12,100 234
PECO Energy 10,800 271
Public Service Enterprise Group 12,300 337
SCEcorp 19,400 303
Southern 31,600 645
Texas Utilities 10,000 318
Unicom 9,600 228
Union Electric 6,300 223
6,239
ENERGY & POWER--0.0%
Zurn Industries 3,700 68
ENTERTAINMENT--0.9%
King World Productions* 1,700 $ 67
Promus 4,800 180
Walt Disney 24,400 1,302
1,549
ENVIRONMENTAL SERVICES--0.6%
Browning Ferris Industries 8,100 275
Rollins Enviromental Services 13,300 57
WMX Technologies 24,300 668
1,000
FINANCIAL SERVICES--2.4%
American Express 23,100 806
Beneficial 2,800 110
Dean Witter Discover 7,886 321
FHLMC 9,100 551
FNMA 12,200 992
Household International 4,300 187
ITT 5,500 564
Merrill Lynch 9,600 409
Salomon Brothers 5,300 180
Transamerica 3,423 194
4,314
FOOD, BEVERAGE & TOBACCO--8.7%
American Brands 9,300 365
Anheuser Busch 12,900 756
Archer Daniels Midland 24,183 450
Brown Forman, Class B 3,300 110
Campbell Soup 11,800 571
Coca Cola 60,900 3,444
ConAgra 11,200 371
CPC International 6,900 373
General Mills 7,200 429
H.J. Heinz 12,400 477
Hershey Foods 4,700 240
Kellogg 10,600 619
PepsiCo 36,600 1,427
Philip Morris 39,700 2,592
Quaker Oats 6,600 219
Ralston-Ralston Purina Group 5,000 239
Sara Lee 22,200 580
Seagram 17,500 556
Unilever N.V. (ADR) 7,800 1,024
UST 8,900 283
Whitman 8,600 164
William Wrigley Jr 5,300 235
15,524
GAS/NATURAL GAS--0.8%
Coastal 4,800 138
Columbia Gas Systems* 2,200 65
Consolidated Natural Gas 5,700 220
Enron 11,800 389
Nicor 2,200 55
ONEOK 4,700 $ 89
Pacific Enterprises 3,200 79
Panhandle Eastern 5,300 122
Sonat 4,400 132
Transco Energy 1,145 22
Williams 5,000 153
1,464
GLASS PRODUCTS--0.2%
Corning 9,400 338
HOTELS & LODGING--0.1%
Hilton Hotels 2,200 163
HOUSEHOLD FURNITURE & FIXTURES--0.1%
Bassett Furniture Industries 1,687 44
Masco 7,100 196
240
HOUSEHOLD PRODUCTS--1.1%
Clorox 2,400 144
Gillette 10,200 832
Maytag 3,100 53
National Service Industries 2,800 76
PPG Industries 9,600 362
Raychem 2,100 85
Sherwin Williams 3,300 112
Snap-On Tools 1,200 44
Stanley Works 1,800 71
Thomas & Betts 800 52
Whirlpool 3,300 181
2,012
INSURANCE--3.4%
Aetna Life & Casualty 5,200 296
Alexander & Alexander Services 4,200 99
American General 9,800 316
American International Group 14,650 1,527
Chubb 3,700 292
Cigna 4,000 299
Continental 3,500 69
General Re 3,800 502
Jefferson-Pilot 2,550 151
Lincoln National 3,800 153
Marsh & McLennan 3,400 279
Providian 4,000 141
Safeco 2,700 148
St. Paul 3,800 190
Torchmark 2,750 114
Travelers 14,825 573
U.S. Healthcare 7,500 332
United Healthcare 8,000 374
Unum 3,700 167
USLife 1,400 53
6,075
LUMBER & WOOD PRODUCTS--0.1%
Louisiana Pacific 5,100 141
MACHINERY--4.7%
Baker Hughes 5,400 $ 110
Black & Decker 3,900 113
Briggs & Stratton 1,800 66
Brunswick 4,400 89
Caterpillar 9,900 551
Cincinnati Milacron 2,200 50
Clark Equipment* 900 74
Crane 1,600 49
Cummins Engine 1,200 54
Deere 3,600 293
Dover 2,100 136
Dresser Industries 8,000 170
Emerson Electric 10,900 725
General Electric 79,000 4,275
General Signal 3,000 107
Giddings & Lewis 2,300 39
Harnischfeger Industries 2,800 78
Ingersoll Rand 4,300 141
McDermott International 3,900 107
Outboard Marine 4,900 103
Pall 4,000 84
Parker Hannifin 2,300 102
Tenneco 8,000 377
Texas Instruments 4,600 407
Timken 1,500 53
Tyco International 1,700 90
Varity* 1,900 72
8,515
MEASURING DEVICES--0.3%
Honeywell 5,700 213
Johnson Controls 1,700 86
Perkin Elmer 2,600 76
Tektronix 2,400 96
471
MEDICAL PRODUCTS & SERVICES--1.2%
Bausch & Lomb 2,200 79
Baxter International 13,500 442
Becton Dickinson 3,900 212
Beverly Enterprises* 4,100 59
C.R. Bard 2,700 75
Columbia/HCA Healthcare 17,437 749
Community Psychiatric 5,500 71
Manor Care 2,300 70
Medtronic 5,000 347
National Medical Enterprises 7,800 124
2,228
METALS & MINING--0.1%
Cyprus AMAX Minerals 4,450 126
MISCELLANEOUS BUSINESS SERVICES--2.7%
Automatic Data Processing 6,600 $ 416
Cisco Systems* 11,600 442
Computer Associates International 8,200 487
Computer Sciences* 2,400 119
Lotus Development* 2,000 77
Microsoft* 28,000 1,990
Novell* 17,400 331
Oracle Systems* 21,150 661
Safety Kleen 5,100 91
Sun Microsystems* 3,500 122
4,736
MISCELLANEOUS CONSUMER SERVICES--0.2%
H & R Block 4,800 208
Service International 3,400 95
303
OIL-DOMESTIC--1.3%
Ashland Oil 2,100 75
Atlantic Richfield 7,400 851
Kerr-McGee 2,900 148
Louisiana Land & Exploration 1,000 37
Pennzoil 2,100 99
Phillips Petroleum 12,100 443
Sun 5,500 157
Unocal 10,700 308
USX Marathon Group 13,300 233
2,351
OIL-INTERNATIONAL--7.1%
Amerada Hess* 3,900 193
Amoco 24,200 1,540
Chevron 30,000 1,440
Exxon 58,700 3,918
Mobil 18,400 1,704
Royal Dutch Petroleum (ADR) 24,600 2,952
Texaco 12,600 838
12,585
PAPER & PAPER PRODUCTS--2.3%
Avery Dennison 1,800 72
Bemis 2,400 71
Boise Cascade 1,200 42
Champion International 4,300 186
Federal Paper Board 3,900 111
Georgia Pacific 4,000 319
International Paper 6,000 451
James River 5,700 148
Kimberly Clark 7,400 385
Mead 2,300 123
Minnesota Mining & Manufacturing 19,200 1,115
Scott Paper 3,600 322
Stone Container 2,400 55
Temple Inland 2,100 94
Union Camp 3,200 166
Westvaco 3,800 $ 158
Weyerhaeuser 9,500 369
4,187
PETROLEUM & FUEL PRODUCTS--1.0%
Burlington Resources 6,000 245
Enserch 6,000 89
Helmerich & Payne 2,100 57
Maxus Energy* 17,100 94
Occidental Petroleum 14,900 326
Rowan* 7,200 47
Santa Fe Energy Resources 8,400 81
Schlumberger 11,600 691
Western Atlas* 2,100 91
1,721
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--0.9%
Eastman Kodak 15,500 823
Polaroid 3,000 104
Xerox 5,100 599
1,526
PRECIOUS METALS--0.6%
Barrick Gold 13,100 328
Echo Bay Mines 5,600 58
Homestake Mining 6,400 118
Newmont Mining 4,243 181
Placer Dome 10,800 263
Santa Fe Pacific Gold 5,040 64
1,012
PRINTING & PUBLISHING--1.5%
American Greetings, Class A 4,000 120
Deluxe 3,200 91
Dow Jones 4,300 163
Gannett 7,600 406
John H. Harland 5,500 124
Knight-Ridder 2,000 113
McGraw Hill 2,000 144
Meredith 3,600 94
Moore 4,500 88
New York Times, Class A 6,400 148
R.R. Donnelly & Sons 6,500 223
Time Warner 18,400 694
Times Mirror, Class A 5,500 106
Tribune 2,900 160
2,674
PROFESSIONAL SERVICES--0.3%
Dun & Bradstreet 8,300 437
National Education* 15,500 50
487
RAILROADS--1.1%
Burlington Northern 4,100 243
Consolidated Rail 3,700 208
CSX 4,800 378
Norfolk Southern 6,400 428
Santa Fe Pacific 3,657 $ 84
Union Pacific 10,000 550
1,891
REAL ESTATE--0.1%
Price Enterprises* 12,256 144
REPAIR SERVICES--0.0%
Ryder System 2,500 60
RETAIL--6.5%
Albertsons 13,000 419
American Stores 6,600 169
Circuit City Stores 3,200 84
Dayton Hudson 3,300 236
Dillard Department Stores 5,100 141
Gap 6,700 238
Giant Food 2,400 57
Great Atlantic & Pacific 2,200 50
Harcourt General 4,100 160
Hasbro 4,400 149
Home Depot 21,133 935
J.C. Penney 11,700 525
K-mart 22,200 305
Kroger* 6,800 179
Lowes 8,700 300
Luby's Cafeterias 1,500 32
Marriott 6,200 215
Mattel 9,765 240
May Department Stores 11,500 426
McDonald's 33,400 1,140
Melville 5,000 186
Nordstrom 4,500 183
Pep Boys-Manny Moe & Jack 2,900 90
Rite Aid 2,600 64
Sears Roebuck 16,400 875
Shoney's* 7,800 84
The Limited 17,700 409
TJX 2,300 30
Toys R US 13,100 336
Wal-Mart Stores 106,200 2,710
Walgreen 5,200 250
Wendy's International 5,800 95
Winn Dixie Stores 3,800 212
Woolworth 5,400 99
11,623
RUBBER & PLASTIC--0.8%
Armstrong World Industries 1,100 50
Cooper Tire & Rubber 3,000 85
Goodyear Tire & Rubber 7,000 257
Illinois Tool Works 4,700 230
Nike, Class B 3,400 254
Premark International 3,200 141
Reebok International 3,500 $ 125
Rubbermaid 6,700 221
1,363
SEMI-CONDUCTORS/INSTRUMENTS--1.2%
Advanced Micro Devices* 3,300 112
AMP 9,400 338
Intel 19,200 1,630
M/A-Com* 5,900 58
National Semiconductor* 5,000 88
2,226
SPECIALTY MACHINERY--0.2%
Cooper Industries 5,100 198
Westinghouse Electric 16,200 228
426
STEEL & STEEL WORKS--1.0%
Alcan Aluminium 12,500 332
Aluminum Company of America 8,000 331
Armco 12,200 84
Bethlehem Steel* 3,500 56
Englehard 4,275 127
Inco 5,800 162
Inland Steel Industries 2,100 58
Nucor 3,900 219
Phelps Dodge 3,300 188
Reynolds Metals 2,500 123
USX--U.S. Steel Group 3,000 101
Worthington Industries 3,150 63
1,844
TELEPHONES & TELECOMMUNICATION--7.9%
Airtouch Communications* 23,200 632
AT&T 72,200 3,737
Ameritech 26,300 1,085
Bell Atlantic 21,200 1,118
Bellsouth 24,200 1,440
GTE 46,600 1,549
MCI Communications 25,500 526
NYNEX 21,300 844
Pacific Telesis Group 20,500 620
Southwestern Bell 29,200 1,230
Sprint 16,700 505
U.S. West 22,100 884
14,170
TRUCKING--0.1%
Consolidated Freightways* 3,100 83
Pittston Services Group 2,000 55
Roadway Services 1,800 86
Yellow 1,500 24
248
WHOLESALE--0.5%
Alco Standard 2,400 $ 174
Genuine Parts 6,450 257
Potlatch 1,700 72
Super-Valu 3,100 83
Sysco 8,700 228
814
TOTAL COMMON STOCKS
(Cost $150,539) 168,686
PREFERRED CONVERTIBLE STOCKS--
AIRCRAFT--0.0%
Teledyne, Ser E, $1.20 37 1
TOTAL PREFERRED CONVERTIBLE STOCKS
(Cost $0) 1
U.S. TREASURY OBLIGATIONS--0.2%
U.S. Treasury Bill
5.710%, 06/15/95 (B) $ 400 395
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $395) 395
MASTER NOTES--3.6%
Goldman Sachs
6.080%, 04/04/95 (A) 3,643 3,643
Heller Financial
6.057%, 04/04/95 (A) 2,755 2,755
TOTAL MASTER NOTES
(Cost $6,398) 6,398
REPURCHASE AGREEMENTS--1.4%
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,444,434 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $2,469,416, with rates
ranging from 3.500% to 12.625%,
maturities from 1995 to 2025, total
market value $2,492,304) 2,443 2,443
TOTAL REPURCHASE AGREEMENTS
(Cost $2,443) 2,443
TOTAL INVESTMENTS--99.8%
(Cost $159,775) 177,923
OTHER ASSETS AND LIABILITIES--0.2%
Other Assets and Liabilities, Net 429
NET ASSETS:
Portfolio
shares--Institutional
Class ($.0001 par
value--2 billion
authorized) based on
15,479,255 outstanding
shares $158,084
Portfolio
shares--Retail Class A
($.0001 par value--2
billon authorized)
based on 104,363
outstanding shares 1,093
Portfolio
shares--Retail Class B
($.0001 par value--2
billion authorized)
based on 8,314
outstanding shares 89
Undistributed net
investment income 94
Accumulated net
realized gain on
investments 714
Net unrealized
appreciation of
investments 18,148
Net unrealized
appreciation of futures
contract 130
TOTAL NET
ASSETS:--100.0% $178,352
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $ 11.44
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 11.45
MAXIMUM SALES CHARGE OF 4.50%+ 0.54
OFFERING PRICE PER
SHARE--RETAIL CLASS A $ 11.99
NET ASET VALUE AND
OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 11.41
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
(A) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995. The date shown is
the longer of the reset date or demand date.
(B) Security has been deposited as initial margin on open futures contract.
ADR--American Depository Receipt
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statement.
The accompanying notes are an integral part of the financial statements.
EQUITY INCOME FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--68.1%
BANKS--2.7%
National City 44,000 $1,172
CHEMICALS--1.0%
E.I. du Pont de Nemours 7,000 424
DRUGS--5.0%
Abbott Laboratories 28,000 997
Johnson & Johnson 14,000 833
Pfizer 4,500 386
2,216
ELECTRICAL UTILITIES--4.5%
Detroit Edison 31,000 848
FPL Group 14,000 509
Unicom 26,000 618
1,975
FINANCIAL SERVICES--1.0%
American Express 12,000 419
FOOD, BEVERAGE & TOBACCO--6.5%
PepsiCo 13,000 507
Philip Morris 24,000 1,566
Sara Lee 29,000 758
2,831
HOUSEHOLD PRODUCTS--2.8%
Newell 49,000 1,250
INSURANCE--1.0%
Providian 13,000 457
MACHINERY--6.4%
General Electric 36,000 1,949
Tenneco 18,000 848
2,797
MARINE TRANSPORTATION--0.8%
Anangel-American Shipholdings (ADR) 25,000 350
MINING--1.5%
Great Northern Iron Ore Properties 15,000 668
OIL-DOMESTIC--4.2%
Atlantic Richfield 16,000 1,840
OIL-INTERNATIONAL--7.9%
Amoco 12,000 764
Exxon 15,000 1,001
Mobil 16,000 1,481
Schlumberger 4,000 239
3,485
REAL ESTATE--1.1%
US Restaurant Properties Master L.P. 31,000 500
REAL ESTATE INVESTMENT TRUSTS--11.9%
Crescent Real Estate Equities 21,000 $ 599
Healthcare Realty Trust 46,000 909
Manufactured Home Communities 46,000 707
National Golf Properties 52,000 1,026
Simon Property Group 44,000 1,070
Weeks* 40,000 915
5,226
RETAIL--3.8%
Albertson's 8,000 258
Sears Roebuck 26,000 1,388
1,646
TELEPHONES & TELECOMMUNICATION--6.0%
AT&T 14,000 725
NYNEX 27,000 1,069
Pacific Telesis Group 27,000 817
2,611
TOTAL COMMON STOCKS
(Cost $28,128) 29,867
CONVERTIBLE BONDS--13.6%
Conner Peripherial
6.500%, 03/01/02 $ 600 462
General Instrument
5.000%, 06/15/00 850 1,279
Inco
5.750%, 07/01/04 925 1,031
Integrated Health Services
6.000%, 01/01/03 550 681
Price
6.750%, 03/01/01 900 864
Vencor
6.000%, 10/01/02 1,200 1,650
TOTAL CONVERTIBLE BONDS
(Cost $5,626) 5,967
PREFERRED CONVERTIBLE STOCKS--8.6%
AUTOMOTIVE--4.4%
Ford Motor, Ser A, $4.20 16,000 1,411
General Motors, Ser C, $3.25 9,000 518
1,929
BANKS--2.6%
Citicorp, Ser 15, $1.217 60,000 1,163
STEEL & STEEL WORKS--1.6%
AK Steel, $2.1525 24,000 690
TOTAL PREFERRED CONVERTIBLE
STOCKS
(Cost $3,884) 3,782
REPURCHASE AGREEMENTS--11.1%
J.P. Morgan 6.028%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,285,594 (collateralized by various
U.S. Treasury Interest STRIPS, total
par value $7,242,465, with maturities
ranging from 2000 to 2010, total
market value $2,330,192) $2,284 $ 2,284
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,575,075 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $2,601,392, with rates
ranging from 3.500% to 12.625%,
maturities from 1995 to 2025, total
market value $2,625,503) 2,574 2,574
TOTAL REPURCHASE AGREEMENTS
(Cost $4,858) 4,858
TOTAL INVESTMENTS--101.4%
(Cost $42,496) 44,474
OTHER ASSETS AND LIABILITIES--(1.4%)
Other Assets and Liabilities, Net (599)
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
4,060,049 outstanding shares 40,350
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 170,549
outstanding shares 1,815
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 15,462
outstanding shares 155
Undistributed net investment income 104
Accumulated net realized loss on investments (527)
Net unrealized appreciation of investments 1,978
TOTAL NET ASSETS:--100.0% $43,875
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 10.33
NET ASSET VALUE, AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 10.33
MAXIMUM SALES CHARGE OF 4.50%+ 0.49
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.82
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 10.30
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the sales charge of 4.50%.
ADR--American Depository Receipt
LP--Limited Partnership
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see notes to the financial
statements.
The accompanying notes are an integral part of the financial statements.
STOCK FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--91.3%
APPAREL--1.5%
Reebok International 102,400 $3,648
AUTOMOTIVE--2.8%
Automotive Industries* 114,500 2,519
General Motors 94,800 4,195
6,714
BANKS--3.7%
BayBanks 68,200 4,399
Chemical Banking 124,600 4,704
9,103
BUILDING & CONSTRUCTION SUPPLIES--0.6%
Griffon* 166,200 1,413
BUSINESS SUPPLIES--1.0%
W.W. Grainger 39,400 2,482
CHEMICALS--2.5%
Ferro 84,000 2,132
Hercules 82,800 3,860
5,992
COMPUTERS & SERVICES--5.9%
Compaq Computer* 73,400 2,532
Hewlett Packard 50,700 6,103
IBM 68,700 5,625
14,260
DRUGS--5.1%
American Home Products 74,400 5,300
Bristol-Myers Squibb 53,200 3,352
Upjohn 102,200 3,654
12,306
FOOD, BEVERAGE & TOBACCO--5.8%
ConAgra 182,100 6,032
Dole Food 144,800 4,199
Sara Lee 152,500 3,984
14,215
HOME APPLIANCES--1.7%
Whirlpool 76,400 4,183
INSURANCE--6.5%
AMBAC 111,100 4,513
General Re 34,600 4,567
Providian 118,600 4,166
Western National 210,800 2,635
15,881
MACHINERY--7.8%
Case Equipment 198,900 4,973
Caterpillar 49,800 2,770
Deere 53,800 4,371
General Electric 129,300 6,998
19,112
METALS & MINING--1.5%
Aluminum Company of America 86,400 $ 3,575
MULTI-INDUSTRY--4.5%
ITT 61,300 6,291
Minnesota Mining & Manufacturing 79,300 4,609
10,900
OFFICE PRODUCTS--1.6%
Xerox 34,200 4,014
OIL-DOMESTIC--2.0%
Unocal 166,000 4,773
OIL-INTERNATIONAL--8.6%
Exxon 55,800 3,725
Mobil 66,900 6,197
Royal Dutch Petroleum (ADR) 61,800 7,416
Texaco 55,700 3,704
21,042
PAPER & PAPER PRODUCTS--5.2%
Bemis 159,000 4,671
James River 161,300 4,194
Scott Paper 41,400 3,700
12,565
PHOTOGRAPHIC EQUIPMENT & SUPPLIES--2.5%
Eastman Kodak 112,600 5,982
RAILROADS--3.1%
CSX 63,900 5,032
Southern Pacific Rail* 138,600 2,426
7,458
REAL ESTATE INVESTMENT TRUSTS--5.0%
Debartolo Realty 237,900 3,360
Duke Realty Investments 89,100 2,361
Equity Residential Properties Trust 87,900 2,285
Simon Property Group 171,100 4,171
12,177
RETAIL--4.8%
Dayton Hudson 57,200 4,090
Gap 71,800 2,549
Sears Roebuck 47,500 2,535
Wal-Mart Stores 101,700 2,593
11,767
SEMICONDUCTORS & RELATED DEVICES--3.7%
AMP 68,600 2,470
Texas Instruments 74,200 6,566
9,036
SPECIALTY MACHINERY--1.0%
York International 63,800 2,520
TELEPHONES & TELECOMMUNICATION--2.9%
Century Telephone Enterprises 81,800 $ 2,485
GTE 141,300 4,698
7,183
TOTAL COMMON STOCKS
(Cost $197,232) 222,301
MASTER NOTES--8.0%
Associates Corporation of North
America
5.920%, 04/04/95 (A) $ 1,816 1,816
Barclays
5.980%, 04/03/95 (A) 5,650 5,650
Goldman Sachs
6.080%, 04/04/95 (A) 5,507 5,507
Heller Financial
6.057%, 04/04/95 (A) 6,632 6,632
TOTAL MASTER NOTES
(Cost $19,605) 19,605
TOTAL INVESTMENTS--99.3%
(Cost $216,837) 241,906
OTHER ASSETS AND
LIABILITIES--0.7%
Other Assets and Liabilities, Net 1,612
NET ASSETS:
Portfolio shares--Institutional Class
($.0001 par value--2 billion authorized)
based on 13,427,150 outstanding shares 206,235
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on
561,413 outstanding shares 8,506
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 85,357
outstanding shares 1,415
Undistributed net investment income 296
Accumulated net realized gain on investmenst 1,997
Net unrealized appreciation of investments 25,069
TOTAL NET ASSETS:--100.0% $243,518
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL
CLASS $ 17.30
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 17.31
MAXIMUM SALES CHARGE OF 4.50%+ 0.82
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 18.13
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 17.26
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
(A) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset date or demand date.
ADR--American Depository Receipt
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
DIVERSIFIED GROWTH FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--88.9%
AUTOMOTIVE--2.1%
Ford Motor 62,000 $1,674
CHEMICALS--1.9%
E.I. du Pont de Nemours 25,000 1,513
COMMUNICATIONS EQUIPMENT--4.3%
Motorola 21,000 1,147
Nokia (ADR) 32,000 2,352
3,499
COMPUTERS & SERVICES--2.3%
Cisco Systems* 50,000 1,906
DRUGS--6.9%
Abbott Laboratories 56,000 1,994
Johnson & Johnson 29,000 1,726
Perrigo* 38,000 442
Pfizer 17,000 1,458
5,620
ELECTRICAL UTILITIES--0.9%
Detroit Edison 28,000 767
FINANCIAL SERVICES--4.4%
American Express 38,000 1,325
FNMA 25,000 2,034
First Financial Management 3,000 217
3,576
FOOD, BEVERAGE & TOBACCO--4.3%
Nabisco Holdings, Class A* 8,100 232
PepsiCo 26,000 1,014
Philip Morris 25,000 1,631
Sara Lee 22,000 575
3,452
HOUSEHOLD PRODUCTS--1.5%
Newell 49,000 1,250
MACHINERY--6.3%
Case Equipment 18,000 450
General Electric 54,000 2,922
Tenneco 37,000 1,744
5,116
MARINE TRANSPORTATION--1.0%
Royal Caribbean Cruises 30,000 784
MEASURING DEVICES--1.6%
MTS Systems 20,000 480
Thermo Electron 16,000 814
1,294
MEDICAL PRODUCTS & SERVICES--4.6%
Healthtrust* 58,000 2,183
Medtronic 22,000 1,526
3,709
MISCELLANEOUS BUSINESS SERVICES--8.3%
General Motors, Class E 18,000 $ 700
Legent* 5,000 165
Microsoft* 25,000 1,778
Novell* 55,000 1,045
Oracle Systems* 66,500 2,075
Synopsys* 6,000 287
The Bisys Group* 31,000 701
6,751
OIL - DOMESTIC--2.8%
Atlantic Richfield 20,000 2,300
OIL - INTERNATIONAL--5.8%
Amoco 22,000 1,400
Exxon 21,000 1,402
Mobil 11,000 1,019
Schlumberger 15,000 894
4,715
PAPER & PAPER PRODUCTS--1.4%
Weyerhaeuser 30,000 1,166
PRINTING & PUBLISHING--0.7%
News (ADR)* 29,000 555
RAILROADS--0.7%
Southern Pacific Rail* 31,000 543
REAL ESTATE INVESTMENT TRUSTS--3.6%
Debartolo Realty 60,000 848
National Golf Properties 33,000 652
Simon Property Group 60,000 1,462
2,962
RETAIL--8.1%
Albertson's 36,000 1,161
Dayton Hudson 19,000 1,359
McDonald's 61,000 2,081
Orchard Supply Hardware Stores* 30,000 293
Sears Roebuck 31,268 1,669
6,563
SEMI-CONDUCTORS/INSTRUMENTS--2.6%
Intel 25,000 2,122
SPECIALTY MACHINERY--2.5%
York International 52,000 2,054
STEEL & STEEL WORKS--3.1%
AK Steel Holding* 28,000 758
Inco 18,000 502
Inland Steel 25,000 688
Rouge Steel 23,000 564
2,512
TELEPHONES & TELECOMMUNICATION--5.9%
Airtouch Communications* 35,000 $ 954
L.M. Ericsson (ADR) 7,000 433
Pacific Telesis Group 33,000 998
Qualcomm* 11,000 360
Tele Danmark (ADR) 12,000 318
Vodafone (ADR) 51,000 1,689
4,752
TRUCKING--1.3%
Fritz 16,000 1,028
TOTAL COMMON STOCKS
(Cost $65,631) 72,183
PREFERRED CONVERTIBLE STOCKS--1.6%
BANKS--1.6%
Citicorp, 1.00 shares 67,000 1,298
TOTAL PREFERRED CONVERTIBLE STOCKS
(Cost $1,309) 1,298
CONVERTIBLE BONDS--2.3%
General Instrument, 21.0526 shares
5.000%, 06/15/00 $ 1,225 1,844
TOTAL CONVERTIBLE BONDS
(Cost $1,626) 1,844
REPURCHASE AGREEMENTS--8.1%
J.P. Morgan 6.028%, dated 03/31/95,
matures 04/03/95, repurchase price
$2,936,566 (collateralized by various
U.S. Treasury Interest STRIPS, total
par value $9,307,096, with maturities
ranging from 2000 to 2010, total
market value $2,994,467) 2,935 2,935
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$3,641,824 (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $3,679,043, with rates
ranging from 6.500% to 12.625%,
maturities from 1995 to 2025, total
market value $3,713,143) 3,640 3,640
TOTAL REPURCHASE AGREEMENTS
(Cost $6,575) 6,575
TOTAL INVESTMENTS--100.9%
(Cost $75,141) 81,900
OTHER ASSETS AND LIABILITIES--(0.9%)
Other Assets and Liabilities, Net (728)
NET ASSETS:
Portfolio shares--Institutional Class ($.0001
par value--2 billion authorized) based on
7,973,711 outstanding shares $75,818
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 184,010
outstanding shares 1,900
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 7,073
outstanding shares 68
Undistributed net investment income 76
Accumulated net realized loss on investments (3,449)
Net unrealized appreciation of investments 6,759
TOTAL NET ASSETS:--100.0% $81,172
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.94
NET ASSET VALUE, AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 9.93
MAXIMUM SALES CHARGE OF 4.50%+ 0.47
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 10.40
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 9.92
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
ADR--American Depository Receipt
STRIPS--Separately Trading of Registered Interest and Principal of
Securities.
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
SPECIAL EQUITY FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--78.5%
AGRICULTURE--2.1%
Pioneer Hi-Bred International 102,500 $3,690
AIRCRAFT--1.2%
Northrop 44,800 2,190
AUTOMOTIVE--0.4%
Oshkosh Truck, Class B 53,200 685
BANKS--3.7%
Bank of Boston 105,700 3,145
Chemical Banking 88,700 3,348
6,493
CHEMICALS--2.5%
IMC Global 90,700 4,433
COMMUNICATIONS EQUIPMENT--0.7%
Aydin* 84,400 1,255
CONSTRUCTION MATERIALS--1.0%
Lafarge 98,400 1,845
DRUGS--0.2%
Hauser Chemical Research* 61,500 308
ELECTRICAL UTILITIES--3.1%
Illinova 69,600 1,583
Public Service Company of Colorado 29,100 895
Unicom 124,600 2,959
5,437
FINANCIAL SERVICES--0.8%
Carr Realty 77,200 1,341
GAMES, TOYS AND CHILDREN'S VEHICLES--0.1%
Educational Insights* 18,000 108
INSURANCE--1.2%
Reliastar Financial 62,700 2,132
MACHINERY--2.5%
Brown & Sharpe Manufacturing* 125,700 911
Dresser Industries 167,800 3,566
4,477
MARINE TRANSPORTATION--4.7%
Overseas Shipholding Group 205,100 4,205
Stolt-Nielsen S.A.* 217,700 4,109
8,314
METALS & MINING--15.0%
AK Steel Holding* 86,100 2,335
Aluminum Company of America 124,600 5,155
Asarco 36,100 952
Cleveland-Cliffs 41,200 $1,586
Freeport-McMoRan Copper & Gold 242,000 5,296
Hecla Mining* 79,300 912
INCO 122,700 3,420
LTV* 155,700 2,374
Lukens 31,100 949
Reynolds Metals 72,800 3,585
26,564
OIL SERVICES--6.5%
Atwood Oceanics* 44,500 606
Halliburton 117,300 4,267
Helmerich & Payne 159,300 4,322
Pride Petroleum Services* 70,000 481
Sonat Offshore Drilling 66,600 1,548
Stolt Comex Seaway, S.A.* 60,000 420
11,644
OIL-DOMESTIC--12.7%
Amerada Hess 20,100 992
Anadarko Petroleum 48,000 2,100
Diamond Shamrock 33,900 894
Louisiana Land & Exploration 108,200 4,044
Murphy Oil 34,700 1,496
Petrocorp* 40,800 316
USX-Marathon Group 332,300 5,816
Valero Energy 302,800 5,564
Wiser Oil 95,900 1,379
22,601
OIL-INTERNATIONAL--3.9%
Texaco 104,200 6,929
PAPER & PAPER PRODUCTS--6.4%
Abitibi-Price* 108,300 1,516
Boise Cascade 87,300 3,034
Bowater 77,700 2,778
Champion International 94,500 4,087
11,415
PRECIOUS METALS--7.2%
Coeur D'Alene Mines 102,200 1,891
Hemlo Gold Mines 250,300 2,503
Newmont Mining 162,599 6,950
Santa Fe Pacific Gold 114,100 1,441
12,785
RETAIL--2.1%
Dayton Hudson 51,300 3,668
WHOLESALE--0.5%
Fleming 41,400 937
TOTAL COMMON STOCKS
(Cost $132,656) 139,251
MASTER NOTES--17.4%
Associates Corporation of North America
5.920%, 04/04/95 (A) $6,867 6,867
Barclays
5.980%, 04/03/95 (A) 6,801 6,801
Goldman Sachs
6.080%, 04/04/95 (A) 8,624 8,623
Heller Financial
6.057%, 04/04/95 (A) 8,468 8,468
TOTAL MASTER NOTES
(Cost $30,759) 30,759
REPURCHASE AGREEMENTS--9.3%
J.P. Morgan 6.028%, dated 03/31/95,
matures 04/03/95, repurchase price
$8,275,318, (collateralized by various
U.S. Treasury Interest STRIPS, total
par value $26,221,734, maturities from
1995 to 2010, market value $8,436,586) 8,271 8,271
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$8,288,491, (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $8,372,377,with interest
rates from 3.500% to 12.625%,
maturities from 1995 to 2025, market
value $8,449,978) 8,284 8,284
TOTAL REPURCHASE AGREEMENTS
(Cost $16,555) 16,555
TOTAL INVESTMENTS--105.2%
(Cost $179,970) 186,565
OTHER ASSETS AND LIABILITIES--(5.2%)
Other Assets and Liabilities, Net (9,200)
NET ASSETS:
Portfolio shares--Institutional Class ($.0001 par
value--2 billion authorized) based on 10,274,300
outstanding shares $156,341
Portfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 538,341
outstanding shares 8,133
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 129,601
outstanding shares 2,088
Undistributed net investment income 135
Accumulated net realized gain on investments 4,073
Net unrealized appreciation of investments 6,595
TOTAL NET ASSETS:--100.0% $177,365
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 16.21
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 16.21
MAXIMUM SALES CHARGE OF 4.50%+ 0.76
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 16.97
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 16.16
</TABLE>
* Non-income producing security.
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
(A) Variable Rate Security with demand features--the rate reported on the
Statement of Net Assets is the rate in effect as of March 31, 1995. The
date shown is the longer of the reset or demand date.
STRIPS--Separately Trading of Registered Interest and Principal of
Securities.
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
REGIONAL EQUITY FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--73.5%
APPAREL/TEXTILES--0.9%
Raven Industries 54,100 $1,109
AUTOMOTIVE--3.6%
Automotive Industries* 160,000 3,520
Tower Automotive* 150,000 1,256
4,776
BANKS--7.5%
Community First Bankshares 125,000 1,938
Investors Bank 129,766 3,244
TCF Financial 110,000 4,742
9,924
BROADCASTING, NEWSPAPERS &
ADVERTISING--1.2%
Lodgenet Entertainment* 210,000 1,575
CHEMICALS--2.2%
Fuller 35,000 1,339
Hawkins Chemical 198,000 1,534
2,873
COMMUNICATIONS EQUIPMENT--3.1%
Communications Systems 290,000 4,133
COMPUTERS & SERVICES--7.0%
BMC Industries 178,700 3,083
Computer Network Technology* 175,800 1,450
Digi International* 210,000 4,620
9,153
DRUGS--0.9%
Lifecore Biomedical* 230,000 1,179
FINANCIAL SERVICES--2.4%
General Growth Properties 155,000 3,178
FOOD, BEVERAGE & TOBACCO--7.1%
Grist Mill* 210,000 2,468
International Multifoods 190,000 3,776
Michael Foods 285,000 3,135
9,379
INSURANCE--1.8%
Crop Growers* 90,000 2,408
MACHINERY--6.2%
Alliant Techsystems* 33,500 1,277
Donaldson 130,000 3,250
Pentair 85,000 3,591
8,118
MEDICAL PRODUCTS & SERVICES--6.6%
Aequitron Medical* 190,800 $ 906
Angeion* 430,000 1,451
ATS Medical* 186,400 1,118
Biovascular* 313,300 1,860
CNS* 146,500 2,821
Minntech* 37,900 578
8,734
MISCELLANEOUS BUSINESS SERVICES--3.8%
Control Data Systems* 400,000 2,800
National Computer Systems 135,000 2,261
5,061
MISCELLANEOUS CONSUMER SERVICES--4.3%
G&K Services 91,550 1,694
Regis* 213,600 3,951
5,645
MISCELLANEOUS TRANSPORTATION--1.1%
Arctco 100,000 1,500
PAPER & PAPER PRODUCTS--1.0%
Fort Howard* 100,000 1,263
PRINTING & PUBLISHING--2.4%
IPI* 122,000 519
Merrill 160,000 2,640
3,159
RETAIL--4.7%
Damark International, Class A* 191,000 1,337
Fingerhut 149,300 1,773
Vicorp Restaurants* 200,000 3,050
6,160
SEMI-CONDUCTORS/INSTRUMENTS--3.5%
FSI International* 23,100 933
Hutchinson Technology* 63,200 1,800
Sheldahl* 16,800 202
Zytec* 210,000 1,628
4,563
SPECIALTY CONSTRUCTION--1.7%
Apogee Enterprises 125,000 2,250
SPECIALTY MACHINERY--0.5%
Recovery Engineering* 40,000 670
TOTAL COMMON STOCKS
(Cost $81,581) 96,810
INVESTMENT IN COMMON STOCK OF AFFILIATES--16.1%
Aetrium* (B) 392,300 5,491
Audio King* (B) 265,000 961
Canterbury Park Holdings* (B) 177,500 333
Deflecta-Shield* (B) 250,000 2,563
Navarre* (B) 152,200 761
Norstan* (B) 220,000 5,005
Northwest Teleproductions* (B) 170,000 $ 361
Rehabilicare* (B) 400,000 900
Rimage* (B) 232,000 1,189
Terrano* (B) 350,000 350
TSI (B) 360,000 3,285
TOTAL INVESTMENT IN COMMON STOCK
OF AFFILIATES
(Cost $19,150) 21,199
CONVERTIBLE BONDS--1.3%
Hector Communications
8.500%, 02/15/02 $ 1,630 1,744
TOTAL CONVERTIBLE BONDS
(Cost $1,630) 1,744
WARRANTS--0.2%
ENTERTAINMENT--0.0%
Canterbury Park Holdings 177,500 44
MEDICAL PRODUCTS & SERVICES--0.2%
Angeion 430,000 94
ATS Medical 186,400 164
258
TOTAL WARRANTS
(Cost $0) 302
MASTER NOTES--5.8%
Barclays
5.980%, 04/03/95 (A) 1,372 1,372
Goldman Sachs
6.080%, 04/04/95 (A) 2,999 2,999
Heller Financial
6.057%, 04/04/95 (A) 3,226 3,226
TOTAL MASTER NOTES
(Cost $7,597) 7,597
REPURCHASE AGREEMENTS--3.2%
J.P. Morgan 6.028%, dated 03/31/95, matures
04/01/95, repurchase price $1,726,832
(collateralized by various U.S. Treasury
Interest STRIPS, total par value $5,471,890,
with maturities ranging from 2000 to 2010,
total market value $1,760,527) 1,726 1,726
Merrill Lynch 6.083%, dated 03/31/95, matures
04/01/95, repurchase price $2,438,954
(collateralized by various U.S. Treasury
Notes and Bonds, total par value $2,463,880,
with rates ranging from 3.500% to 12.625%,
maturities from 1995 to 2025, total
market value $2,486,717) 2,438 2,438
TOTAL REPURCHASE AGREEMENTS
(Cost $4,164) 4,164
TOTAL INVESTMENTS--100.1%
(Cost $114,121) $131,816
OTHER ASSETS AND LIABILITIES--(0.1%)
Other Assets and Liabilities, Net (83)
NET ASSETS:
Porfolio shares--Insititutional
Class ($.0001 par value--2 billion
authorized) based on 9,023,127
outstanding shares 101,649
Porfolio shares--Retail Class A ($.0001 par
value--2 billion authorized) based on 749,312
outstanding shares 8,231
Portfolio shares--Retail Class B ($.0001 par
value--2 billion authorized) based on 86,887
oustanding shares 1,096
Distributions in excess of net investment income (46)
Accumulated net realized gain on investments 3,109
Net unrealized appreciation of investments 17,694
TOTAL NET ASSETS:--100.0% $131,733
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 13.36
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 13.36
MAXIMUM SALES CHARGE OF 4.50%+ 0.63
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 13.99
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE--RETAIL CLASS B (1) $ 13.30
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
(A) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as March 31, 1995. The date shown is the
next reset date.
(B) Investments are representing five percent or more of the outstanding
voting securities of the issuer, and is or was an affiliate, as defined
in the Investment Company Act of 1940 at or during the semi-annual
fiscal year ended March 31, 1995. The total cost of the purchases of
Aetrium, Audio King, Canterbury Park Holdings, Deflecta Shield,
Navarre, Norstan, Northwest Teleproductions, Rehabilicare, Rimage,
Terrano, and TSI were $4,140,854, $813,707, $710,000, $2,465,275,
$856,125, $3,495,187, $623,125, $1,043,312, $1,695,992, $689,625, and
$2,619,700 respectively. There were neither sales nor dividend income
during the semi-annual period for any of the affiliated securities.
Change in unrealized appreciation since 09/30/94 in affiliated
securities is $1,279,843.
STRIPS--Separately Trading of Registered Interest and Principal of
Securities.
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
EMERGING GROWTH FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS--87.9%
AUTOMOTIVE--2.7%
Deflecta-Shield* 38,000 $ 389
Tower Automotive* 21,000 176
565
BEAUTY PRODUCTS--0.7%
Drypers* 17,000 155
BROADCASTING, NEWSPAPERS & ADVERTISING--2.0%
Bell Cablemedia PLC(ADR)* 12,000 233
National Wireless Holdings* 11,800 122
Pricellular, Class A* 11,000 78
433
CHEMICALS--1.3%
H.B. Fuller 7,000 268
COMMUNICATIONS EQUIPMENT--5.6%
Communications Systems 23,000 328
General Datacomm Industries* 7,000 103
Qualcomm* 6,500 213
Telebit* 15,000 92
Telewest Communications PLC(ADR)* 4,000 110
Tellabs* 6,000 349
1,195
DRUGS--4.8%
Genzyme* 6,000 233
Idexx Labs* 15,000 622
Perrigo* 14,000 163
1,018
FINANCIAL SERVICES--8.3%
Advanta, Class A 4,500 151
Advanta, Class B 6,000 188
Concord Holding* 22,000 363
First USA 2,000 84
Fiserv* 17,000 450
SPS Transaction Services* 11,000 385
The Bisys Group* 6,000 136
1,757
FOOD, BEVERAGE & TOBACCO--0.9%
Starbucks* 8,000 192
HAZARDOUS WASTE MANAGEMENT--0.6%
Molton Metal Technology* 7,400 124
HOUSEHOLD PRODUCTS--3.3%
Coleman* 11,000 422
Recoton* 17,000 283
705
INSURANCE--2.8%
Partnerre Holdings 9,000 191
Vesta Insurance Group 13,000 394
585
MARINE TRANSPORTATION--1.0%
Royal Carribean Cruises 8,000 $ 209
MEASURING DEVICES--0.6%
Quickturn Design Systems* 16,000 126
MEDICAL PRODUCTS & SERVICES--13.5%
American Medical Response* 7,000 176
ATS Medical* 36,100 217
Cerner* 4,300 209
HBO 9,000 392
Healthsource* 9,000 426
Quorum Health Group* 22,000 457
Target Therapeutics* 14,000 508
Vencor* 13,700 486
2,871
METALWORKING MACHINERY & EQUIPMENT--2.4%
Greenfield Industries 13,000 367
Shaw Group* 24,000 144
511
MISCELLANEOUS BUSINESS SERVICES--3.6%
Keane* 12,000 291
Landmark Graphics* 17,000 318
Spectrum Holobyte* 10,000 161
770
MISCELLANEOUS FURNITURE & FIXTURES--0.7%
Falcon Building Products, Class A* 14,000 138
MOTORCYCLES, BICYCLES & PARTS--1.0%
Cannondale* 17,000 213
PETROLEUM & FUEL PRODUCTS--3.7%
Benton Oil & Gas* 30,000 330
Coflexip-Sponsored (ADR) 8,000 219
Coho Energy Resources* 46,000 236
785
PRINTING & PUBLISHING--1.2%
Thomas Nelson 12,500 247
RAILROADS--0.6%
Johnstown America Industries* 9,000 122
RETAIL--4.1%
Bed Bath & Beyond* 12,000 297
Orchard Supply Hardware Stores* 15,000 146
Reddi Brake Supply* 14,000 46
West Marine* 15,000 387
876
RETAIL-EATING PLACES--1.6%
Buffets* 11,000 105
Hometown Buffet* 22,000 233
338
SEMI-CONDUCTORS/INSTRUMENTS--1.0%
Fusion Systems* 6,900 $ 202
SERVICES-PREPACKAGED SOFTWARE--8.0%
Aspen Technologies* 11,000 217
BTG* 26,000 202
Legent* 7,500 248
National Instruments* 9,000 162
Network Peripherals* 17,100 368
Platinum Software* 12,000 117
Sybase* 10,000 399
1,713
SERVICES - SECURITY--1.3%
ITI Technologies* 11,000 278
SPECIALTY CONSTRUCTION--0.8%
Apogee Enterprises 2,000 36
Insituform Mid-America, Class A 13,000 137
173
SPECIALTY MACHINERY--2.3%
York International 12,500 494
TELEPHONES & TELECOMMUNICATION--5.4%
A+ Communications* 15,000 203
American Paging* 12,000 89
Broadband Technologies* 7,000 177
Compania de Telefonos de Chile (ADR) 4,000 267
International Cabletel* 14,000 415
1,151
TRUCKING--2.1%
Fritz 7,000 450
TOTAL COMMON STOCKS
(Cost $17,076) 18,664
PREFERRED STOCKS--0.4%
SERVICES - PREPACKAGED SOFTWARE--0.4%
Network Imaging 7,000 80
TOTAL PREFERRED STOCKS
(Cost $117) 80
WARRANTS--0.1%
MEDICAL PRODUCTS & SERVICES--0.1%
ATS Medical 27,000 24
TOTAL WARRANTS
(Cost $0) 24
REPURCHASE AGREEMENTS--13.1%
J.P. Morgan 6.028%, dated 03/31/95, matures
04/03/95, repurchase price $1,336,809,
(collateralized by various U.S. Treasury
Interest STRIPS, total par value $4,235,905,
maturities from 1995 to 2010,
market value $1,362,861) 1,336 1,336
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$1,435,647, (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $1,450,177, with interest
rates from 3.500% to 12.625%,
maturities from 1995 to 2025, market
value $1,463,618.) $ 1,435 $ 1,435
TOTAL REPURCHASE AGREEMENTS
(Cost $2,771) 2,771
TOTAL INVESTMENTS--101.5%
(Cost $19,964) 21,539
OTHER ASSETS AND LIABILITIES--(1.5%)
Other Assets and Liabilities, Net (317)
NET ASSETS:
Portfolio shares--Institutional Class ($.0001 par
value--2 billion authorized) based on 1,868,201
outstanding shares 19,562
Portfolio shares--Retail Class A ($.0001 par
value--2 billion shares authorized) based on
11,847 outstanding shares 120
Portfolio shares--Retail Class B ($.0001 par
value--2 billion shares authorized) based on
4,648 shares outstanding 49
Distributions in excess of net investment income (2)
Accumulated net realized loss on investments (82)
Net unrealized appreciation of investments 1,575
TOTAL NET ASSETS:--100.0% $21,222
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 11.26
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 11.26
MAXIMUM SALES CHARGE OF 4.50%+ 0.53
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 11.79
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 11.21
</TABLE>
* Non-income producing security.
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
ADR--American Depository Receipt
PLC--Public Limited Company
STRIPS--Separately Trading of Registered Interest and Principal of
Securities.
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
INTERNATIONAL FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
FOREIGN STOCKS--95.8%
ARGENTINA--2.8%
Banco Frances Rio Plata ADR 11,900 $ 216
Cementera Argentina* 100,000 480
Dycasa Dragados "B"* 60,000 210
IRSA "B"* 93,450 179
Polledo* 140,000 115
Quilmes Industrial 12,300 203
Telecom Argentina ADR 10,000 433
1,836
AUSTRALIA--0.2%
Broken Hill Proprietary 10,000 131
CANADA--0.2%
Chauvco Resources* 11,400 128
CHILE--0.3%
Banco O'Higgins ADR 6,500 115
Madeco ADR 4,500 106
221
COLUMBIA--0.4%
Banco Ganadero ADR 6,500 123
Cementos Paz del Rio GDR* 5,000 87
Corporacion Financiera Valle GDS 4,000 59
269
FINLAND--3.7%
Nokia 17,000 2,479
FRANCE--0.9%
Cie Bancaire 5,150 576
GERMANY--3.9%
Bayer* 1,200 296
Mannesmann* 2,500 648
SAP* 200 155
Schering 500 369
Veba 3,000 1,088
2,556
HONG KONG--10.3%
Cheung Kong Holdings 115,000 501
Citic Pacific 380,000 939
First Pacific 1,699,000 1,242
Hong Kong Telecommunications 542,200 1,055
Hopewell Holdings 300,000 211
HSBC Holdings 50,600 571
Hutchison Whampoa 109,000 481
Sun Hung Kai Properties 117,000 798
Television Broadcasts 185,000 632
Wharf Holdings 124,000 405
6,835
INDIA--1.1%
East India Hotels GDR* 7,100 $ 106
I.T.C. ADR 70,000 490
Ranbaxy Laboratories GDR 5,500 124
720
INDONESIA--0.9%
Indonesian Satellite ADR* 17,500 617
IRELAND--0.3%
Elan ADR* 5,000 186
ISRAEL--0.2%
ECI Telecommunications 8,500 126
ITALY--3.1%
Assicurazioni Generali 18,000 402
Fiat* 101,000 379
Instituto Mobiliare 22,000 115
Mediobanca 28,000 193
Montedison* 400,000 255
Olivetti Group* 400,000 377
Stet-Soc Fin Telefonica 87,000 225
Telecom Italia 48,000 112
2,058
JAPAN--24.2%
Alpine Electronics 11,000 148
Bridgestone 40,000 594
Canon 14,000 231
Canon Sales 6,000 140
Daifuku 23,000 307
Daini Denden 150 1,298
Daiwa House 11,000 180
Daiwa Securities 24,000 275
Fanuc 4,000 174
Hirose Electric 5,000 299
Ito Yokado 20,000 991
Kawasaki Steel* 59,000 232
KOA 35,000 496
Komatsu 89,000 641
Kubota 31,000 216
Kurita Water Industries 9,000 220
Kyocera 12,000 893
Maeda 15,000 171
Matsushita Electric 16,000 258
Minebea 55,000 349
Mitsubishi Electric 34,000 250
Mitsui Trust & Banking 20,000 191
Murata Manufacturing 18,000 699
NEC 110,000 1,177
Nippon Steel 157,000 606
Nippon Telegraph & Telephone 36 310
Nippondenso 10,000 195
Nissan Motors 41,000 $ 313
Nomura Securities 33,000 616
Sanwa Bank 17,000 325
Sharp 61,000 991
Sony 8,000 401
Sumitomo Bank 10,000 213
Sumitomo Chemical 112,000 594
Takara Standard 10,000 118
Tokyo Electronics 9,000 274
Toyota Motor 27,000 551
15,937
MALAYSIA--6.5%
Aokam Perdana 72,000 404
Arab-Malaysian Merchant Bank 103,000 1,058
Malayan Banking 53,000 358
New Straits Times Press 100,000 271
Resort World 180,000 932
Sime Darby Malaysia 125,200 312
Technology Resources 188,000 539
Telekom Malaysia 60,000 415
4,289
MEXICO--3.1%
Apasco* 10,000 27
Bufete Industrial ADR 10,500 106
Cemex "A" 51,750 108
Cifra 117,000 147
Empresas ICA Sociedad
Controladora ADR* 10,000 60
Grupo Carso ADR* 18,600 163
Grupo Financiero Banamex "C"* 170,000 195
Grupo Financiero Inbursa "C"* 85,000 116
Grupo Iusacell ADS* 15,510 184
Grupo Posadas "A"* 400,000 106
Grupo Sidek ADR* 60,000 150
Grupo Synkro ADR* 250,000 150
Grupo Televisa GDR 11,000 183
Kimberly Clark "A" 11,000 90
San Luis 9,545 130
Tolmex 70,000 161
2,076
NETHERLANDS--1.6%
Heineken* 1,100 186
Polygram 10,000 553
Wolters Kluwer* 4,200 323
1,062
NEW ZEALAND--0.2%
Telecom New Zealand ADR* 2,700 161
NORWAY--1.6%
Hafslund Nycomed "B"* 20,000 394
Petroleum Geo-Services ADR* 30,000 668
1,062
PERU--1.8%
Banco De Credito Del Peru 60,000 $ 98
Banco Wiese 39,248 275
Cementos Norte Pacasmayo* 50,000 150
Cia De Minas Buenaventura* 30,000 125
Cia Peruana de Telefonos* 300,000 345
El Pacifico Peruana Suiza 7,000 171
Telefonos 2000* 65,000 56
1,220
PHILIPPINES--0.8%
San Miguel "B" 120,000 546
SINGAPORE--5.6%
Cerebos Pacific 133,000 768
City Developments 87,600 481
DBS Land 110,000 293
Keppel 54,000 436
Singapore Press "F" 16,000 271
Straits Steamship Land 249,000 812
United Overseas Bank "F" 67,200 667
3,728
SOUTH KOREA--1.5%
Korea Fund 15,000 321
Korea Mobile Phone* 6,700 174
Samsung Electric GDS* 208 14
Samsung Electric Non-Voting GDS* 10,800 472
981
SWEDEN--6.1%
Allgon Free "B"* 12,000 207
Asea Free "B" 8,250 645
Astra Free "B" 26,200 680
Autoliv* 10,000 378
Ericsson Telephone ADR 34,500 2,132
4,042
SWITZERLAND--3.3%
Brown Boveri & Cie Bearer* 750 713
Roche Holdings* 225 1,300
Union Bank of Switzerland Bearer* 180 163
2,176
TAIWAN--0.2%
Taiwan Fund 7,000 148
THAILAND--2.8%
Advanced Info Service "F" 16,000 221
Advanced Info Service "L" 41,000 570
Land and House "F"* 30,000 512
TelecomAsia GDR* 52,000 196
United Communication* 25,000 351
1,850
UNITED KINGDOM--8.1%
Barclays Bank 25,000 $ 252
British Airways* 27,000 179
British Sky Broadcasting ADR 35,000 861
Commercial Union 39,400 346
Next 92,400 439
Reuters Holdings 90,000 692
Smithkline Beecham Units 109,500 807
Takare 48,000 163
Unilever 31,000 614
Vodafone Group 105,000 338
Zeneca Group 48,000 676
5,367
VENEZUELA--0.1%
Industrias Mavesa ADS 11,000 43
TOTAL FOREIGN STOCKS
(Cost $69,968) 63,426
REPURCHASE AGREEMENT--5.4%
Merrill Lynch 6.134%, dated 3/31/95,
matures 4/3/95, repurchase price
$3,567,453 (collateralized by various
U.S. Treasury Bonds, total par value
$906,000, with interest rates from
3.500% to 12.625%, with maturity
dates ranging from 5/15/95 to
2/15/25: U.S. Treasury Notes, total
par value $2,661,000, with interest
rates from 6.375% to 8.500%, with
maturity dates from 1/15/00 to
3/31/00: total market value
$3,638,191) $ 3,567 3,567
TOTAL REPURCHASE AGREEMENT
(Cost $3,567) 3,567
TOTAL INVESTMENTS--101.2%
(Cost $73,535) 66,993
OTHER ASSETS AND LIABILITIES--(1.2%)
Other Assets and Liabilities, Net (797)
NET ASSETS:
Portfolio shares of Institutional Class ($.0001
par value--2 billion authorized) based on
7,705,662 outstanding shares $75,590
Portfolio shares of Retail Class A ($.0001 par
value--2 billion authorized) based on 58,420
outstanding shares 580
Portfolio shares of Retail Class B ($.0001 par
value--2 billion authorized) based on 8,070
outstanding shares 79
Accumulated net investment loss (391)
Accumulated net realized loss on investments and
foreign currency transactions (2,612)
Net unrealized depreciation on forward foreign
currency contracts, foreign currency and
translation of other assets and liabilities in
foreign currency (508)
Net unrealized depreciation of investments (6,542)
TOTAL NET ASSETS:--100.0% $66,196
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 8.52
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--RETAIL CLASS A $ 8.51
MAXIMUM SALES CHARGE OF 4.50%+ 0.40
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 8.91
NET ASSET VALUE AND OFFERING PRICE PER
SHARE--RETAIL CLASS B (1) $ 8.46
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
ADR--American Depository Receipts
ADS--American Depository Shares
GDR--Global Depository Receipts
GDS--Global Depository Shares
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statements.
The accompanying notes are an integral part of the financial statements.
TECHNOLOGY FUND
Description Par (000)/Shares Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCK--96.1%
COMMUNICATIONS EQUIPMENT--24.1%
Broadband Technologies* 10,300 $260
DSC Communications* 15,900 518
General Datacomm Industries* 14,000 207
General Instrument* 11,400 396
L.M. Ericsson Telephone 4,200 260
Motorola 7,200 393
Nokia (ADR) 9,300 683
Qualcomm* 8,900 291
Telebit* 21,000 129
Tellabs* 11,500 670
3,807
COMPUTERS & SERVICES--18.6%
Adaptec* 8,100 267
Amdahl 22,100 243
Cabletron Systems* 4,300 193
Cisco Systems* 10,800 412
Compaq Computer* 13,800 475
Concentra* 6,900 95
Convex Computer* 17,000 111
Credence Systems* 6,100 191
Pinnacle Micro* 6,200 76
S3* 15,900 357
Silicon Graphics* 6,100 217
Tandem Computers* 19,500 302
2,939
SEMI-CONDUCTORS/INSTRUMENTS--33.7%
Applied Materials* 6,100 336
Dataware Technologies* 5,200 77
Fourth Shift* 11,500 46
FSI International* 4,900 198
Fusion Systems* 5,600 164
Informix* 26,400 908
LSI Logic* 7,200 378
Micron Technology 9,700 737
MRV Communications* 9,800 145
Novellus Systems* 3,100 192
Oracle Systems* 30,750 960
Parametric Technology* 8,100 324
Parcplace Systems* 4,200 64
Quickturn Design Systems* 13,000 102
Saber Software* 14,600 157
SDL* 1,400 36
Softdesk* 5,500 132
Solectron* 3,200 94
Sonic Solution* 4,500 49
Synopsys* 4,700 224
5,323
SERVICES - PREPACKAGED SOFTWARE--19.7%
Aspen Technologies* 8,400 $ 166
BTG* 14,500 112
C*ATS Software* 500 8
CFI Proservices* 13,300 171
Compuware* 5,600 207
Legent* 9,300 307
Microsoft* 11,000 783
National Instruments* 2,700 49
Network Peripherals* 11,400 245
Novell* 14,400 274
Softkey International* 5,100 139
Software Artistry* 600 14
Spectrum Holobyte* 18,700 300
Sybase* 4,720 189
TGV Software* 500 11
Tivoli Systems* 1,400 52
Viasoft* 10,800 93
3,120
TOTAL COMMON STOCK
(Cost $13,118) 15,189
PREFERRED STOCKS--0.1%
SERVICES - PREPACKAGED SOFTWARE--0.1%
Network Imaging 1,700 19
TOTAL PREFERRED STOCKS
(Cost $33) 19
REPURCHASE AGREEMENTS--5.5%
J.P. Morgan 6.028%, dated 03/31/95,
matures 04/03/95, repurchase price
$223,845, (collateralized by various
U.S. Treasury Interest STRIPS, total
par value $709,293, maturities from
1995 to 2010, total market value
$228,208) $ 224 224
Merrill Lynch 6.083%, dated 03/31/95,
matures 04/03/95, repurchase price
$641,267, (collateralized by various
U.S. Treasury Notes and Bonds, total
par value $647,757, with interest rates
from 3.500% to 12.625%, maturities
from 1995 to 2025, total market value
$653,761) 641 641
TOTAL REPURCHASE AGREEMENTS
(Cost $865) 865
TOTAL INVESTMENTS--101.7%
(Cost $14,016) 16,073
OTHER ASSETS AND LIABILITIES--(1.7%)
Other Assets and Liabilities, Net (271)
NET ASSETS:
Portfolio shares--Institutional
Class ($.0001 par value--2 billion
authorized) based on 1,184,764
outstanding shares $12,996
Portfolio shares--Retail Class
A ($.0001 par value--2 billion
authorized) based on 19,708
outstanding shares 229
Portfolio shares--Retail Class
B ($.0001 par value--2 billion
authorized) based on 13,168
outstanding shares 165
Accumulated net investment loss (14)
Accumulated net realized gain on
investments 369
Net unrealized appreciation of
investments 2,057
TOTAL NET ASSETS:--100.0% $15,802
NET ASSET VALUE,
OFFERING PRICE, AND
REDEMPTION PRICE PER
SHARE--INSTITUTIONAL CLASS $ 12.98
NET ASSET VALUE AND
REDEMPTION PRICE
PER SHARE--RETAIL CLASS A $ 12.97
MAXIMUM SALES CHARGE OF 4.50%+ 0.61
OFFERING PRICE PER SHARE--RETAIL CLASS A $ 13.58
NET ASSET VALUE AND OFFERING PRICE
PER SHARE--RETAIL CLASS B (1) $ 12.88
</TABLE>
* Non-income producing security
+ The offer price is calculated by dividing the net asset value by 1
minus the maximum sales charge of 4.50%.
ADR--American Depository Receipt
STRIPS--Separately Trading of Registered Interest and Principal of
Securities.
(1) Retail Class B has a contingent deferred sales charge. For a
description of a possible redemption charge, see the notes to the
financial statement.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS (000) (Unaudited)
For the period ended March 31, 1995
<TABLE>
<CAPTION>
MINNESOTA
LIMITED INSURED
TERM TAX INTERMEDIATE INTERMEDIATE
FREE INCOME TAX FREE TAX FREE
FUND FUND FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $330 $ 604 $1,206
EXPENSES:
Investment advisory fees 54 77 153
Administrator fees 25 25 30
Transfer agent fees 10 10 11
Amortization of organizational costs 4 -- 3
Custodian fees 2 3 7
Directors' fees -- -- 1
Registration fees 2 11 17
Professional fees 1 2 3
Printing 2 3 6
Distribution fees--Retail Class A 1 1 2
Distribution fees--Retail Class B -- -- --
Other 1 1 1
TOTAL EXPENSES 102 133 234
LESS: Expenses waived or absorbed (55) (58) (81)
Total Net expenses 47 75 153
Investment Income--Net 283 529 1,053
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS--NET:
Net realized gain (loss) on investments (31) 101 (57)
Net change in unrealized appreciation (depreciation) of investments 86 770 1,713
NET GAIN (LOSS) ON INVESTMENTS 55 871 1,656
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $338 $1,400 $2,709
(table continued)
COLORADO
INTERMEDIATE LIMITED INTERMEDIATE INTERMEDIATE FIXED MORTGAGE
TAX FREE TERM TERM GOVERNMENT INCOME SECURITIES
FUND INCOME FUND INCOME FUND BOND FUND FUND FUND
$850 $2,715 $2,589 $2,194 $ 5,467 $1,028
105 315 264 222 525 101
26 70 60 48 116 25
12 17 12 12 20 10
3 2 2 -- -- 3
4 5 4 3 9 2
-- 1 1 1 2 --
16 1 8 29 42 1
2 8 6 5 12 2
4 11 9 8 19 4
1 12 4 2 9 --
-- -- -- -- 2 --
1 3 3 2 5 1
174 445 373 332 761 149
(70) (175) (109) (111) (232) (48)
104 270 264 221 529 101
746 2,445 2,325 1,973 4,938 927
22 (83) (131) (70) (1,553) --
1,451 (328) 1,072 1,064 5,312 345
1,473 (411) 941 994 3,759 345
$2,219 $2,034 $3,266 $2,967 $ 8,697 $1,272
</TABLE>
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS (000) (CONTINUED) (Unaudited)
For the period ended March 31, 1995
<TABLE>
<CAPTION>
LIMITED
ASSET VOLATILITY EQUITY
ALLOCATION BALANCED STOCK INDEX
FUND FUND FUND (1) FUND
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Interest $ 467 $ 25 $ 6 $ 120
Dividends 502 3,313 162 2,207
Less: Foreign taxes withheld -- -- -- --
Total investment income 969 3,338 168 2,327
EXPENSES:
Investment advisory fees 150 519 33 574
Administrator fees 35 117 19 131
Transfer agent fees 15 20 3 21
Amortization of organizational costs 2 2 -- 2
Custodian fees 3 9 1 10
Directors' fees 1 2 -- 2
Registration fees 1 11 4 8
Professional fees 3 11 1 13
Printing 5 19 1 18
Distribution fees--Retail Class A 1 17 -- 1
Distribution fees--Retail Class B -- 3 -- --
Other 2 5 -- 10
TOTAL EXPENSES 218 735 62 790
LESS: EXPENSES WAIVED OR ABSORBED (52) (147) (27) (502)
TOTAL NET EXPENSES 166 588 35 288
INVESTMENT INCOME (LOSS)--NET 803 2,750 133 2,039
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS--NET:
Net realized gain (loss) on investments 298 433 42 741
Net realized gain on futures contracts -- -- -- 274
Net realized loss on forward foreign currency contracts
and foreign currency transactions -- -- -- --
Net change in unrealized appreciation (depreciation) of investments 1,566 9,290 868 11,986
Net change in unrealized appreciation on futures contract -- -- -- 130
Net change in unrealized depreciation on forward foreign currency contracts,
foreign currency and translation of other assets and liabilities in foreign
currency -- -- -- --
NET GAIN (LOSS) ON INVESTMENTS 1,864 9,723 910 13,131
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,667 $12,473 $1,043 $15,170
(table continued)
EQUITY DIVERSIFIED SPECIAL REGIONAL EMERGING
INCOME STOCK GROWTH EQUITY EQUITY GROWTH INTERNATIONAL TECHNOLOGY
FUND FUND FUND FUND FUND FUND FUND FUND
$205 $ -- $ 159 $ 1,126 $ 64 $ 59 $ 184 $ 20
638 2,957 593 1,404 871 15 393 15
-- -- -- -- -- -- (40) --
843 2,957 752 2,530 935 74 537 35
113 693 197 533 394 46 367 38
25 154 43 120 89 25 47 25
13 22 16 21 18 14 20 14
5 -- 5 -- 2 3 3 3
5 12 9 9 7 2 74 2
-- 3 1 2 2 -- 1 --
8 34 17 22 11 5 15 3
3 15 4 12 9 1 6 1
4 20 7 20 14 2 12 1
2 11 2 10 11 -- 1 --
-- 4 -- 5 2 -- -- --
2 6 2 5 4 -- 15 --
180 974 303 759 563 98 561 87
(58) (194) (91) (98) (89) (44) (48) (41)
122 780 212 661 474 54 513 46
721 2,177 540 1,869 461 20 24 (11)
(61) 1,819 (368) 5,105 3,727 12 (2,210) 402
-- -- -- -- -- -- -- --
-- -- -- -- -- -- (168) --
2,045 17,008 6,476 (3,849) 7,791 1,337 (7,852) 1,326
-- -- -- -- -- -- -- --
-- -- -- -- -- -- (467) --
1,984 18,827 6,108 1,256 11,518 1,349 (10,697) 1,728
$2,705 $21,004 $6,648 $ 3,125 $11,979 $1,369 $(10,673) $1,717
</TABLE>
(1) The Limited Volatility Stock Fund commenced operations on November 15, 1994.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CHANGES IN NET ASSETS (000) (Unaudited)
<TABLE>
<CAPTION>
MINNESOTA COLORADO
LIMITED TERM INSURED INTERMEDIATE
TAX FREE INCOME INTERMEDIATE INTERMEDIATE TAX FREE
FUND TAX FREE FUND TAX FREE FUND FUND
10/1/94 12/1/93 10/1/94 10/1/93 10/1/94 2/28/94(4) 10/1/94 4/4/94(5)
to to to to to to to to
3/31/95 9/30/94(3) 3/31/95 9/30/94 3/31/95 9/30/94 3/31/95 9/30/94
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income--net $ 283 $ 396 $ 529 $ 152 $ 1,053 $ 282 $ 746 $ 42
Net realized gain (loss) on investments (31) (13) 101 (38) (57) (12) 22 1
Net change in unrealized appreciation
(depreciation) of investments 86 (115) 770 (178) 1,713 (252) 1,451 (32)
Net increase (decrease) in net assets
resulting from operations 338 268 1,400 (64) 2,709 18 2,219 11
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (274) (93) (507) (78) (1,049) (254) (732) (30)
Retail class A (11) (315) (25) (74) (39) (28) (21) (10)
Retail class B -- -- -- -- -- -- -- --
Net realized gain on investments:
Institutional class -- -- -- -- -- -- (2) --
Retail class A -- -- -- -- -- -- -- --
Retail class B -- -- -- -- -- -- -- --
Distributions in excess of realized
capital gains:
Institutional class -- -- -- -- -- -- -- --
Retail class A -- -- -- (21) -- -- -- --
Retail class B -- -- -- -- -- -- -- --
TOTAL DISTRIBUTIONS (285) (408) (532) (173) (1,088) (282) (755) (40)
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Transfer from Retail class A -- 15,896 -- 2,109 -- -- -- --
Proceeds from sales 1,070 1,082 29,473 6,147 51,255 21,192 41,476 7,465
Shares issued in connection with
acquisition of
Managed Income Fund -- -- -- -- -- -- -- --
Reinvestment of distributions 115 45 28 40 41 41 10 10
Payments for redemptions (3,793) (582) (7,878) (2,027) (6,945) (709) (3,209) (169)
Increase (decrease) in net assets from
Institutional class transactions (2,608) 16,441 21,623 6,269 44,351 20,524 38,277 7,306
Retail class A:
Proceeds from sales 72 3,189 31 802 325 1,606 595 691
Shares issued in connection with
acquisition of
Managed Income Fund -- -- -- -- -- -- -- --
Reinvestment of distributions 11 152 22 83 37 28 10 6
Payments for redemptions (51) (6,128) (83) (481) (32) (114) (27) --
Transfer to Institutional class -- (15,896) -- (2,109) -- -- -- --
Increase (decrease) in net assets from
Retail class A transactions 32 (18,683) (30) (1,705) 330 1,520 578 697
Retail class B:
Proceeds from sales -- -- -- -- -- -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Increase (decrease) in net assets from
Retail class B transactions -- -- -- -- -- -- -- --
Increase (decrease) in net assets from
capital share transactions (2,576) (2,242) 21,593 4,564 44,681 22,044 38,855 8,003
Total increase (decrease) in net assets (2,523) (2,382) 22,461 4,327 46,302 21,780 40,319 7,974
NET ASSETS AT BEGINNING OF PERIOD 16,948 19,330 7,296 2,969 21,780 -- 7,974 --
NET ASSETS AT END OF PERIOD (2) $ 14,425 $ 16,948 $ 29,757 $ 7,296 $ 68,082 $ 21,780 48,293 $ 7,974
(1)Capital share transactions:
Institutional class:
Transfer from Retail class A -- 1,589 -- 199 -- -- -- --
Proceeds from sales 108 108 2,891 592 5,399 2,183 4,143 732
Shares issued in connection with
acquisition of
Managed Income Fund -- -- -- -- -- -- -- --
Reinvestment of distributions 12 4 3 4 4 4 1 1
Payments for redemptions (382) (58) (762) (195) (734) (73) (316) (16)
Total Institutional class transactions (262) 1,643 2,132 600 4,669 2,114 3,828 717
Retail class A:
Proceeds from sales 7 319 3 74 34 166 59 68
Shares issued in connection with
acquisition of
Managed Income Fund -- -- -- -- -- -- -- --
Reinvestment of distributions 1 15 2 8 4 3 1 --
Payments for redemptions (5) (612) (8) (45) (3) (12) (3) --
Transfer to Institutional class -- (1,589) -- (199) -- -- -- --
Total Retail class A transactions 3 (1,867) (3) (162) 35 157 57 68
Retail class B:
Proceeds from sales -- -- -- -- -- -- -- --
Reinvestment of distributions -- -- -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- -- -- --
Total Retail class B transactions -- -- -- -- -- -- -- --
NET INCREASE (DECREASE) FROM SHARE
TRANSACTIONS (259) (224) 2,129 438 4,704 2,271 3,885 785
(table continued)
INTERMEDIATE INTERMEDIATE FIXED
LIMITED TERM TERM INCOME GOVERNMENT INCOME MORTGAGE
INCOME FUND FUND BOND FUND FUND SECURITIES FUND
10/1/94 10/1/93 10/1/94 10/1/93 10/1/94 10/1/93 10/1/94 10/1/93 10/1/94 10/1/93
to to to to to to to to to to
3/31/95 9/30/94 3/31/95 9/30/94 3/31/95 9/30/94 3/31/95 9/30/94 3/31/95 9/30/94
$2,445 $ 4,118 $ 2,325 $ 2,960 $ 1,973 $ 325 $ 4,938 $ 3,345 $ 927 $ 1,780
(83) 29 (131) (863) (70) (78) (1,553) (188) -- (62)
(328) (2,149) 1,072 (2,753) 1,064 (344) 5,312 (5,201) 345 (1,966)
2,034 1,998 3,266 (656) 2,967 (97) 8,697 (2,044) 1,272 (248)
(2,302) (2,182) (2,257) (1,900) (1,934) (217) (4,898) (2,150) (928) (1,208)
(257) (1,862) (87) (1,064) (55) (109) (226) (1,197) (8) (572)
-- -- -- -- -- -- (11) -- -- --
(2,927) -- (24) -- -- -- (308) -- -- --
(379) -- (1) -- -- -- (16) (51) -- (10)
-- -- -- -- -- -- (1) -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- (685) -- (18) -- (523) -- --
-- -- -- -- -- -- -- -- -- --
(5,865) (4,044) (2,369) (3,649) (1,989) (344) (5,460) (3,921) (936) (1,790)
-- 82,491 -- 59,843 -- 2,156 -- 44,936 -- 32,357
21,963 16,209 19,641 25,019 63,910 27,456 108,927 58,825 922 4,386
41,594 -- -- -- -- -- -- -- -- --
2,043 2,151 1,780 1,829 137 81 2,121 1,749 860 1,182
(18,412) (29,445) (8,596) (15,273) (4,375) (1,614) (15,829) (12,069) (1,223) (8,219)
47,188 71,406 12,825 71,418 59,672 28,079 95,219 93,441 559 29,706
2,734 28,721 61 4,929 189 1,156 458 12,649 2 3,906
5,042 -- -- -- -- -- -- -- -- --
202 1,645 83 1,744 45 117 222 1,635 6 582
(6,607) (59,260) (681) (9,581) (302) (718) (1,919) (12,211) (8) (1,640)
-- (82,491) -- (59,843) -- (2,156) -- (44,936) -- (32,357)
1,371 (111,385) (537) (62,751) (68) (1,601) (1,239) (42,863) -- (29,509)
1 1 -- -- -- -- 1,431 116 -- --
-- -- -- -- -- -- 10 -- -- --
(2) -- -- -- -- -- (23) -- -- --
(1) 1 -- -- -- -- 1,418 116 -- --
48,558 (39,978) 12,288 8,667 59,604 26,478 95,398 50,694 559 197
44,727 (42,024) 13,185 4,362 60,582 26,037 98,635 44,729 895 (1,841)
79,776 121,800 71,653 67,291 29,753 3,716 98,330 53,601 28,674 30,515
$124,503 $ 79,776 $84,838 $ 71,653 $90,335 $29,753 $196,965 $ 98,330 $29,569 $ 28,674
-- 8,255 -- 5,960 -- 229 -- 4,120 -- 3,201
2,242 1,636 2,070 2,597 7,170 3,034 10,547 5,555 96 438
3,917 -- -- -- -- -- -- -- -- --
209 218 188 188 15 9 206 165 89 120
(1,879) (2,975) (905) (1,581) (490) (177) (1,536) (1,140) (127) (833)
4,489 7,134 1,353 7,164 6,695 3,095 9,217 8,700 58 2,926
278 2,860 6 506 21 123 44 1,128 -- 379
467 -- -- -- -- -- -- -- -- --
21 164 9 174 5 13 22 147 1 57
(675) (5,916) (72) (967) (34) (78) (186) (1,092) (1) (159)
-- (8,255) -- (5,960) -- (229) -- (4,120) -- (3,201)
91 (11,147) (57) (6,247) (8) (171) (120) (3,937) -- (2,924)
-- -- -- -- -- -- 136 11 -- --
-- -- -- -- -- -- 1 -- -- --
-- -- -- -- -- -- (2) -- -- --
-- -- -- -- -- -- 135 11 -- --
4,580 (4,013) 1,296 917 6,687 2,924 9,232 4,774 58 2
</TABLE>
(2) Including undistributed (distributions in excess of) net investment income
(000) of ($2) and $0 for Limited Term Tax Free Income Fund, ($3) and $0 for
Intermediate Tax Free Fund, ($35) and $0 for Minnesota Insured Intermediate
Tax Free Fund, ($5) and $2 for Colorado Intermediate Tax Free Fund. ($42)
and $72 for Limited Term Income Fund, ($19) and $0 for Intermediate Term
Income Fund, ($16) and $0 Intermediate Government Bond Fund, ($192) and $6
for Fixed Income Fund, and ($9) and $0 for Mortgage Securities Fund at
March 31, 1995 and September 30, 1994, respectively.
(3) On April 28, 1994, the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994.
(4) The Minnesota Insured Intermediate Tax Free Fund commenced operations on
February 28, 1994.
(5) The Colorado Intermediate Tax Free Fund commenced operations on April 4,
1994.
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
ASSET LIMITED VOLATILITY
ALLOCATION FUND BALANCED FUND STOCK FUND
10/1/94 10/1/93 10/1/94 10/1/93 11/15/94(3)
to to to to to
3/31/95 9/30/94 3/31/95 9/30/94 3/31/95
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income (loss)--net $ 803 $ 1,373 $ 2,750 $ 4,192 $ 133
Net realized gain (loss) on investments 298 1,042 433 2,435 42
Net realized gain on futures contracts -- -- -- -- --
Net realized loss on forward foreign currency contracts and
foreign currency transactions -- -- -- -- --
Net change in unrealized appreciation (depreciation) of
investments 1,566 (1,588) 9,290 (3,010) 868
Net change in unrealized appreciation on futures contract -- -- -- -- --
Net change in unrealized depreciation on forward foreign
currency contracts, foreign currency and translation of other
assets and liabilities in foreign currency -- -- -- -- --
Net increase (decrease) in net assets resulting from
operations 2,667 827 12,473 3,617 1,043
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (767) (991) (2,332) (2,793) (129)
Retail class A (12) (384) (220) (1,366) --
Retail class B (1) -- (7) -- --
Net realized gain on investments:
Institutional class (1,084) -- (1,858) -- --
Retail class A (15) (713) (187) (1,884) --
Retail class B (1) -- (7) -- --
Total distributions (1,880) (2,088) (4,611) (6,043) (129)
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Transfer from Retail class A -- 51,261 -- 109,870 --
Proceeds from sales 3,840 6,840 31,360 28,604 14,680
Reinvestment of distributions 1,836 987 4,111 2,773 98
Payments for redemptions (12,903) (13,790) (17,308) (18,873) (50)
Increase (decrease) in net assets from Institutional class
transactions (7,227) 45,298 18,163 122,374 14,728
Retail class A:
Proceeds from sales 62 3,688 617 24,928 --
Reinvestment of distributions 25 1,097 406 3,244 --
Payments for redemptions (104) (6,020) (1,820) (10,460) --
Transfer to Institutional class -- (51,261) -- (109,870) --
Increase (decrease) in net assets from Retail class A
transactions (17) (52,496) (797) (92,158) --
Retail class B:
Proceeds from sales 186 11 569 274 --
Reinvestment of distributions 2 -- 13 -- --
Payments for redemptions (1) -- (43) -- --
Increase in net assets from Retail class B transactions 187 11 539 274 --
Increase (decrease) in net assets from capital share
transactions (7,057) (7,187) 17,905 30,490 14,728
Total increase (decrease) in net assets (6,270) (8,448) 25,767 28,064 15,642
NET ASSETS AT BEGINNING OF PERIOD 47,945 56,393 139,289 111,225 --
NET ASSETS AT END OF PERIOD (2) $ 41,675 $ 47,945 $165,056 $ 139,289 $15,642
(1)Capital share transactions:
Institutional class:
Transfer from Retail class A -- 5,136 -- 10,707 --
Proceeds from sales 369 658 2,993 2,697 1,468
Reinvestment of distributions 181 95 396 261 10
Payments for redemptions (1,266) (1,341) (1,650) (1,774) (5)
Total Institutional class transactions (716) 4,548 1,739 11,891 1,473
Retail class A:
Proceeds from sales 6 345 59 2,312 --
Reinvestment of distributions 2 103 39 303 --
Payments for redemptions (10) (564) (172) (967) --
Transfer to Institutional class -- (5,136) -- (10,707) --
Total Retail class A transactions (2) (5,252) (74) (9,059) --
Retail class B:
Proceeds from sales 18 1 54 26 --
Reinvestment of distributions -- -- 1 -- --
Payments for redemptions -- -- (4) -- --
Total Retail class B transactions 18 1 51 26 --
NET INCREASE (DECREASE) IN CAPITAL SHARES (700) (703) 1,716 2,858 1,473
(table continued)
EQUITY EQUITY DIVERSIFIED SPECIAL REGIONAL
INDEX FUND INCOME FUND STOCK FUND GROWTH FUND EQUITY FUND EQUITY FUND
10/1/94 10/1/93 10/1/94 12/1/93 10/1/94 10/1/93 10/1/94 12/1/93 10/1/94 10/1/93 10/1/94 10/1/93
to to to to to to to to to to to to
3/31/95 9/30/94 3/31/95 9/30/94(4) 3/31/95 9/30/94 3/31/95 9/30/94(4) 3/31/95 9/30/94 3/31/95 9/30/94
$ 2,039 $ 3,793 $ 721 $ 959 $ 2,177 $ 2,724 $ 540 $ 304 $ 1,869 $ 2,024 $ 461 $ 611
741 1,237 (61) (442) 1,819 7,831 (368) (3,037) 5,105 8,668 3,727 2,221
274 -- -- -- -- -- - -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- -- --
11,986 56 2,045 334 17,008 319 6,476 1,902 (3,849) 7,538 7,791 2,652
130 -- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- -- --
15,170 5,086 2,705 851 21,004 10,874 6,648 (831) 3,125 18,230 11,979 5,484
(1,972) (2,885) (612) (61) (1,848) (2,082) (469) (95) (1,641) (1,518) (472) (486)
(10) (912) (34) (880) (80) (608) (15) (242) (84) (490) (34) (112)
(1) -- (1) -- (5) (2) -- -- (9) (1) (1) --
(1,427) -- -- -- (6,156) -- -- -- (8,609) -- (2,571) --
(7) (188) -- -- (307) (3,673) -- -- (473) (5,674) (216) (888)
(1) -- -- -- (26) -- -- -- (52) -- (10) --
(3,418) (3,985) (647) (941) (8,422) (6,365) (484) (337) (10,868) (7,683) (3,304) (1,486)
-- 143,478 -- 6,302 -- 110,876 -- 2,393 -- 88,018 -- 61,030
14,769 33,718 24,912 12,340 81,227 52,481 47,747 32,761 44,163 29,156 20,199 27,827
3,295 2,867 86 20 6,108 1,908 195 68 8,645 1,418 2,903 471
(16,365) (23,678) (2,510) (800) (22,008) (24,357) (6,543) (803) (7,754) (7,305) (6,556) (4,225)
1,699 156,385 22,488 17,862 65,327 140,908 41,399 34,419 45,054 111,287 16,546 85,103
466 17,529 80 3,926 1,143 20,003 171 2,689 1,736 18,076 1,234 23,298
17 1,100 34 737 376 4,166 15 229 555 5,968 250 997
(117) (8,148) (281) (25,578) (690) (29,532) (419) (31,086) (469) (3,615) (457) (6,404)
-- (143,478) -- (6,302) -- (110,876) -- (2,393) -- (88,018) -- (61,030)
366 (132,997) (167) (27,217) 829 (116,239) (233) (30,561) 1,822 (67,589) 1,027 (43,139)
64 29 154 1 1,059 350 56 13 1,689 364 912 186
1 -- 1 -- 29 2 -- -- 56 1 9 --
(5) -- (1) -- (24) -- (1) -- (22) -- (11) --
60 29 154 1 1,064 352 55 13 1,723 365 910 186
2,125 23,417 22,475 (9,354) 67,220 25,021 41,221 3,871 48,599 44,063 18,483 42,150
13,877 24,518 24,533 (9,444) 79,802 29,530 47,385 2,703 40,856 54,610 27,158 46,148
164,475 139,957 19,342 28,786 163,716 134,186 33,787 31,084 136,509 81,899 104,575 58,427
$178,352 $ 164,475 $43,875 $19,342 $243,518 $163,716 $81,172 $33,787 $177,365 $136,509 $131,733 $104,575
-- 14,112 -- 600 -- 7,556 -- 223 -- 6,040 -- 5,673
1,356 3,201 2,535 1,247 4,988 3,185 5,134 3,361 2,752 1,778 1,628 2,308
311 271 9 2 387 116 21 7 561 85 247 38
(1,524) (2,248) (252) (81) (1,337) (1,469) (683) (89) (484) (457) (520) (351)
143 15,336 2,292 1,768 4,038 9,388 4,472 3,502 2,829 7,446 1,355 7,668
42 1,626 8 397 69 1,225 18 295 107 1,122 99 1,910
2 102 4 75 24 260 2 25 36 383 21 84
(11) (753) (28) (2,600) (42) (1,808) (45) (3,198) (29) (224) (37) (539)
-- (14,112) -- (600) -- (7,556) -- (223) -- (6,040) -- (5,673)
33 (13,137) (16) (2,728) 51 (7,879) (25) (3,101) 114 (4,759) 83 (4,218)
5 3 15 -- 64 21 6 1 106 21 72 15
-- -- -- -- 2 -- -- -- 4 -- 1 --
-- -- -- -- (2) -- -- -- (1) -- (1) --
5 3 15 -- 64 21 6 1 109 21 72 15
181 2,202 2,291 (960) 4,153 1,530 4,453 402 3,052 2,708 1,510 3,465
(table continued)
EMERGING
GROWTH INTERNATIONAL TECHNOLOGY
FUND FUND FUND
10/1/94 4/4/94(5) 10/1/94 4/4/94(5) 10/1/94 4/4/94(5)
to to to to to to
3/31/95 9/30/94 3/31/95 9/30/94 3/31/95 9/30/94
$ 20 $ 4 $ 24 $ (29) $ (11) $ (3)
12 66 (2,210) (177) 402 143
-- -- -- -- -- --
-- -- (168) (443) -- --
1,337 239 (7,852) 1,309 1,326 731
-- -- -- -- -- --
-- -- (467) (40) -- --
1,369 309 (10,673) 620 1,717 871
(24) (3) -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
(159) -- -- -- (174) --
(1) -- -- -- (2) --
-- -- -- -- -- --
(184) (3) -- -- (176) --
-- -- -- -- -- --
13,627 6,695 31,879 47,575 7,881 5,773
55 1 -- -- 26 --
(668) (148) (3,639) (225) (539) (145)
13,014 6,548 28,240 47,350 7,368 5,628
34 86 129 459 188 53
1 -- -- -- 2 --
(1) -- (6) (2) (14) --
-- -- -- -- -- --
34 86 123 457 176 53
35 18 58 22 164 2
-- -- -- -- -- --
(4) -- (1) -- (1) --
31 18 57 22 163 2
13,079 6,652 28,420 47,829 7,707 5,683
14,264 6,958 17,747 48,449 9,248 6,554
6,958 -- 48,449 -- 6,554 --
$21,222 $6,958 $66,196 $48,449 $15,802 $6,554
-- -- -- -- -- --
1,277 664 3,427 4,717 645 595
5 -- -- -- 2 --
(63) (15) (416) (22) (42) (15)
1,219 649 3,011 4,695 605 580
3 9 14 45 15 6
-- -- -- -- -- --
-- -- (1) -- (1) --
-- -- -- -- -- --
3 9 13 45 14 6
3 2 6 2 13 --
-- -- -- -- -- --
-- -- -- -- -- --
3 2 6 2 13 --
1,225 660 3,030 4,742 632 586
</TABLE>
(2) Including undistributed (distributions in excess of) net investment income
(000) of $33 and $10 for Asset Allocation, $215 and $24 for Balanced, $4
for Limited Volatility, $94 and $38 for Equity Index, $104 and $30 for
Equity Income, $296 and $52 for Stock, $76 and $20 for Diversified Growth,
$135 and $0 for Special Equity, ($46) and $0 for Regional Equity, ($2) and
$1 for Emerging Growth, and accumulated net investment (loss) of ($391) and
($415) for International, and ($14) and ($3) for Technology Fund, at March
31, 1995 and September 30, 1994, respectively.
(3) The Limited Volatility Stock Fund commenced operations on November 15,
1994.
(4) On April 28, 1994, the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994.
(5) The Emerging Growth, International, and Technology Fund commenced
operations on April 4, 1994.
The accompanying notes are an integral part of the financial statements.
FINANCIAL HIGHLIGHTS (Unaudited)
For the period ended March 31, 1995 and the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS NET ASSET
VALUE NET GAINS OR FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM END OF END OF
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIMITED TERM TAX FREE INCOME
INSTITUTIONAL CLASS
1995* $ 9.95 $0.18 $ 0.04 $(0.18) $ -- $ 9.99 2.28%+ $ 13,792
1994(1) 9.98 0.06 (0.03) (0.06) -- 9.95 0.27%+ 16,349
RETAIL CLASS A
1995* $ 9.95 $0.18 $ 0.04 $(0.18) $ -- $ 9.99 2.28%+ $ 633
1994(2) 10.03 0.22 (0.07) (0.23) -- 9.95 1.50%+ 599
1993(3)(4) 10.00 0.18 0.02 (0.17) -- 10.03 2.02% 19,330
INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1995* $10.28 $0.24 $ 0.20 $(0.24) $ -- $10.48 4.31%+ $ 28,639
1994(5) 10.89 0.29 (0.61) (0.29) -- 10.28 (2.91%)+ 6,168
RETAIL CLASS A
1995* $10.28 $0.25 $ 0.20 $(0.24) $ -- $10.49 4.41%+ $ 1,118
1994 10.92 0.44 (0.57) (0.44) (0.07)** 10.28 (1.25%) 1,128
1993 10.56 0.47 0.42 (0.47) (0.06) 10.92 8.66% 2,969
1992 10.34 0.53 0.22 (0.53) -- 10.56 7.23% 725
1991(6) 10.04 0.50 0.31 (0.50) (0.01) 10.34 8.15%+ 637
1990(7) 10.08 0.56 (0.04) (0.56) -- 10.04 5.31% 537
1989(7) 10.19 0.56 (0.11) (0.56) -- 10.08 4.57% 491
1988(7)(8) 10.03 0.47 0.16 (0.47) -- 10.19 6.73%+ 425
MINNESOTA INSURED INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1995* $ 9.59 $0.22 $ 0.17 $(0.22) $ -- $ 9.76 4.17%+ $ 66,208
1994(9) 10.00 0.25 (0.41) (0.25) -- 9.59 (1.58%)+ 20,272
RETAIL CLASS A
1995* $ 9.58 $0.22 $ 0.18 $(0.22) $ -- $ 9.76 4.28%+ $ 1,874
1994(9) 10.00 0.25 (0.42) (0.25) -- 9.58 (1.68%)+ 1,508
COLORADO INTERMEDIATE TAX FREE
INSTITUTIONAL CLASS
1995* $10.16 $0.23 $ 0.19 $(0.24) $ -- $10.34 4.22%+ $ 47,000
1994(10) 10.00 0.22 0.16 (0.22) -- 10.16 3.76%+ 7,281
RETAIL CLASS A
1995* $10.15 $0.24 $ 0.19 $(0.24) $ -- $10.34 4.32%+ $ 1,293
1994(10) 10.00 0.21 0.16 (0.22) -- 10.15 3.66%+ 693
LIMITED TERM INCOME
INSTITUTIONAL CLASS
1995* $ 9.85 $0.27 $(0.03) $(0.27) $ -- $ 9.82 2.52%+ $114,129
1994(5) 10.02 0.29 (0.17) (0.29) -- 9.85 1.24%+ 70,266
RETAIL CLASS A
1995* $ 9.85 $0.27 $(0.03) $(0.27) $ -- $ 9.82 2.52%+ $ 10,374
1994 10.06 0.44 (0.22) (0.43) -- 9.85 2.21% 9,509
1993(11) 10.00 0.29 0.07 (0.30) -- 10.06 3.61%+ 121,800
RETAIL CLASS B
1995*(12) $ 9.84 $0.17 $(0.12) $(0.14) $ -- $ 9.75 1.07%+ $ --
1994(13) 9.86 0.04 0.01 (0.07) -- 9.84 0.51%+ 1
INTERMEDIATE TERM INCOME
INSTITUTIONAL CLASS
1995* $ 9.55 $0.29 $ 0.11 $(0.30) $ -- $ 9.65 4.26%+ $ 82,146
1994(5) 10.01 0.31 (0.46) (0.31) -- 9.55 (1.48%)+ 68,445
RETAIL CLASS A
1995* $ 9.55 $0.30 $ 0.10 $(0.30) $ -- $ 9.65 4.26%+ $ 2,692
1994 10.22 0.46 (0.56) (0.46) (0.11)** 9.55 (1.05%) 3,208
1993(11) 10.00 0.41 0.29 (0.41) (0.07) 10.22 7.21%+ 67,291
INTERMEDIATE GOVERNMENT BOND
INSTITUTIONAL CLASS
1995* $ 8.98 $0.27 $ 0.05 $(0.27) $ -- $ 9.03 3.70%+ $88,417
1994(5) 9.41 0.27 (0.43) (0.27) -- 8.98 (1.77%)+ 27,776
RETAIL CLASS A
1995* $ 8.98 $0.28 $ 0.05 $(0.27) $ -- $ 9.04 3.70%+ $ 1,918
1994 9.52 0.41 (0.51) (0.39) (0.05)** 8.98 (1.13%) 1,977
1993 10.18 0.44 0.02 (0.44) (0.68) 9.52 4.99% 3,716
1992 10.25 0.60 0.28 (0.60) (0.35) 10.18 8.88% 589
1991(6) 10.01 0.65 0.24 (0.65) -- 10.25 9.13%+ 1,756
1990(7) 10.05 0.75 (0.04) (0.75) -- 10.01 7.41% 1,573
1989(7) 9.99 0.74 0.06 (0.74) -- 10.05 8.35% 1,501
1988(7)(8) 10.03 0.58 (0.01) (0.61) -- 9.99 6.18%+ 375
FIXED INCOME
INSTITUTIONAL CLASS
1995* $10.37 $0.33 $ 0.19 $(0.34) $(0.03) $10.52 5.10%+ $188,547
1994(5) 11.11 0.38 (0.74) (0.38) -- 10.37 (3.23%)+ 90,187
RETAIL CLASS A
1995* $10.37 $0.34 $ 0.19 $(0.34) $(0.03) $10.53 5.16%+ $ 6,881
1994 11.38 0.57 (0.89) (0.57) (0.12)*** 10.37 (2.92%) 8,028
1993 11.13 0.62 0.36 (0.61) (0.12) 11.38 9.20% 53,601
1992 10.59 0.66 0.60 (0.66) (0.06) 11.13 12.34% 5,645
1991(6) 10.01 0.65 0.58 (0.65) -- 10.59 12.48%+ 6,045
1990(7) 10.44 0.74 (0.26) (0.74) (0.17) 10.01 5.14% 2,209
1989(7) 10.13 0.74 0.31 (0.74) -- 10.44 10.93% 555
1988(7)(8) 10.03 0.62 0.13 (0.65) -- 10.13 8.07%+ 240
RETAIL CLASS B
1995* $10.35 $0.30 $ 0.18 $(0.30) $(0.03) $10.50 4.70%+ $ 1,537
1994(13) 10.54 0.08 (0.17) (0.10) -- 10.35 (0.88%)+ 115
MORTGAGE SECURITIES
INSTITUTIONAL CLASS
1995* $ 9.71 $0.31 $ 0.11 $(0.31) $ -- $ 9.82 4.57%+ $ 29,310
1994(5) 10.30 0.38 (0.59) (0.38) -- 9.71 (2.15%)+ 28,418
RETAIL CLASS A
1995* $ 9.71 $0.31 $ 0.11 $(0.31) $ -- $ 9.82 4.57%+ $ 259
1994 10.34 0.56 (0.63) (0.56) -- 9.71 (0.79%) 256
1993(11) 10.00 0.42 0.34 (0.42) -- 10.34 7.76%+ 30,515
ASSET ALLOCATION
INSTITUTIONAL CLASS
1995* $10.38 $0.19 $ 0.51 $(0.19) $(0.25) $10.64 6.93%+ $ 40,766
1994(5) 10.68 0.20 (0.30) (0.20) -- 10.38 (0.90%)+ 47,227
RETAIL CLASS A
1995* $10.39 $0.19 $ 0.49 $(0.18) $(0.25) $10.64 6.76%+ $ 706
1994 10.60 0.27 (0.08) (0.26) (0.14) 10.39 1.81% 707
1993(11) 10.00 0.19 0.60 (0.19) -- 10.60 8.01%+ 56,393
RETAIL CLASS B
1995* $10.37 $0.14 $ 0.50 $(0.15) $(0.25) $10.61 6.38%+ $ 203
1994(13) 10.40 0.05 (0.03) (0.05) -- 10.37 0.19% 11
BALANCED
INSTITUTIONAL CLASS
1995* $10.54 $0.19 $ 0.65 $(0.18) $(0.15) $11.05 8.21%+ $150,640
1994(5) 10.86 0.25 (0.32) (0.25) -- 10.54 (0.64%)+ 125,285
RETAIL CLASS A
1995* $10.54 $0.19 $ 0.63 $(0.17) $(0.15) $11.04 8.04%+ $ 13,571
1994 10.73 0.34 (0.02) (0.34) (0.17) 10.54 3.02% 13,734
1993(11) 10.00 0.28 0.75 (0.28) (0.02) 10.73 10.39%+ 111,225
RETAIL CLASS B
1995* $10.53 $0.15 $ 0.64 $(0.14) $(0.15) $11.03 7.66%+ $ 845
1994(13) 10.66 0.06 (0.12) (0.07) -- 10.53 (0.55%)+ 270
LIMITED VOLATILITY STOCK
INSTITUTIONAL CLASS
1995(14) $10.00 $0.11 $0.61 $(0.10) $-- $10.62 7.28%+ $15,642
(table continued)
RATIO OF RATIO OF
NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE
EXPENSES TO INCOME TO NET ASSETS
AVERAGE AVERAGE (EXCLUDING PORTFOLIO
NET ASSETS NET ASSETS WAIVERS) TURNOVER RATE
0.60% 3.64% 1.30% 28%
0.60 3.26 1.28 57
0.60% 3.66% 1.55% 28%
0.90 2.47 1.53 57
0.81 2.30 1.76 22
0.68% 4.83% 1.22% 43%
0.45 4.48 2.20 52
0.68% 4.74% 1.47% 43%
0.59 4.13 2.78 52
0.71 4.31 5.09 27
0.99 4.83 16.09 23
0.99 5.35 15.48 15
1.08 5.58 13.85 4
1.09 5.57 19.55 4
0.84 5.87 13.60 0
0.70% 4.83% 1.07% 18%
0.67 4.57 1.59 22
0.70% 4.78% 1.32% 18%
0.67 4.57 1.84 22
0.70% 4.96% 1.16% 7%
0.69 4.51 4.71 4
0.70% 4.96% 1.41% 7%
0.69 4.51 4.96 4
0.60% 5.44% 0.99% 61%
0.60 4.40 1.03 48
0.60% 5.34% 1.24% 61%
0.60 4.17 1.23 48
0.60 3.61 1.27 104
1.60% 5.18% 1.99% 61%
1.60 3.50 2.03 48
0.70% 6.16% 0.98% 15%
0.58 4.81 1.07 177
0.70% 6.16% 1.23% 15%
0.69 2.48 1.24 177
0.70 4.90 1.29 163
0.70% 6.24% 1.04% 10%
0.36 5.32 1.45 74
0.70% 6.13% 1.29% 10%
0.53 4.49 2.14 74
0.71 4.00 4.73 182
0.99 6.03 14.14 101
0.99 6.99 6.76 100
1.08 7.57 5.55 40
1.19 7.49 9.65 72
0.95 6.78 17.20 0
0.70% 6.60% 1.00% 28%
0.61 5.53 0.92 142
0.77% 6.45% 1.25% 28%
0.68 3.83 1.06 142
0.70 5.65 1.14 91
0.99 6.12 2.68 180
0.99 6.85 4.11 176
1.07 7.49 5.46 144
1.22 7.26 22.44 157
0.96 7.18 20.70 93
1.70% 5.71% 2.00% 28%
1.70 4.89 1.92 142
0.70% 6.43% 1.03% 14%
0.56 5.79 1.07 35
0.70% 6.42% 1.28% 14%
0.70 5.12 1.30 35
0.70 5.24 1.42 29
0.77% 3.76% 1.01% 63%
0.75 2.91 1.12 32
0.92% 3.61% 1.26% 63%
0.75 2.01 1.29 32
0.75 2.40 1.34 31
1.77% 2.80% 2.01% 63%
1.75 1.94 2.12 32
0.78% 3.72% 0.97% 26%
0.75 3.51 1.05 98
0.92% 3.56% 1.22% 26%
0.77 2.63 1.24 98
0.75 3.31 1.29 77
1.78% 2.78% 1.97% 26%
1.75 2.80 2.05 98
0.75% 2.84% 1.33% 20%
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
* All ratios for the period have been annualized.
** Represents distributions in excess of net realized gains.
*** (0.11) consists of distributions in excess of net realized gains.
(1) Institutional Class shares have been offered since August 2, 1994. All
ratios for the period have been annualized.
(2) On April 28, 1994 the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994. All ratios for the period have been annualized.
(3) For the period ended November 30.
(4) Commenced operations on February 19, 1993. All ratios for the period have
been annualized.
(5) Institutional Class shares have been offered since February 4, 1994. All
ratios for the period have been annualized.
(6) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(7) For the period ended October 31.
(8) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(9) Commenced operations on February 28, 1994. All ratios for the period have
been annualized.
(10) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(11) Commenced operations on December 14, 1992. All ratios for the period have
been annualized.
(12) Closed operations on January 31, 1995. All ratios for the period have been
annualized.
(13) Retail Class B shares have been offered since August 15, 1994. All ratios
for the period have been annualized.
(14) Commenced operations on November 15, 1994. All ratios for the period have
been annualized.
FINANCIAL HIGHLIGHTS (concluded) (Unaudited)
For the period ended March 31, 1995 and the periods ended September 30,
For a share outstanding throughout the period
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS NET ASSET
VALUE NET GAINS OR FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM END OF END OF
OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN PERIOD (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY INDEX
INSTITUTIONAL CLASS
1995* $10.67 $0.13 $ 0.86 $(0.13) $(0.09) $11.44 9.50%+ $177,063
1994(1) 10.85 0.20 (0.18) (0.20) -- 10.67 0.18%+ 163,688
RETAIL CLASS A
1995* $10.68 $0.12 $ 0.86 $(0.12) $(0.09) $11.45 9.42%+ $ 1,195
1994 10.60 0.25 0.09 (0.25) (0.01) 10.68 3.25% 758
1993(2) 10.00 0.20 0.60 (0.20) -- 10.60 8.02%+ 139,957
RETAIL CLASS B
1995* $10.66 $0.12 $ 0.81 $(0.09) $(0.09) $11.41 8.89%+ $ 95
1994(3) 10.68 0.01 0.04 (0.07) -- 10.66 0.48%+ 29
EQUITY INCOME
INSTITUTIONAL CLASS
1995* $ 9.89 $0.20 $ 0.43 $(0.19) $ -- $10.33 6.54%+ $ 41,954
1994(4) 9.90 0.07 (0.03) (0.05) -- 9.89 0.45%+ 17,489
RETAIL CLASS A
1995 $ 9.89 $0.21 $ 0.42 $(0.19) $ -- $10.33 6.50%+ $ 1,762
1994(5) 9.87 0.41 -- (0.39) -- 9.89 4.22%+ 1,852
1993(6)(7) 10.00 0.57 (0.14) (0.56) -- 9.87 4.44%+ 28,786
RETAIL CLASS B
1995* $ 9.88 $0.17 $ 0.41 $(0.16) $ -- $10.30 5.99%+ $ 159
1994(3) 9.87 0.04 0.02 (0.05) -- 9.88 0.57%+ 1
STOCK
INSTITUTIONAL CLASS
1995* $16.50 $0.18 $ 1.37 $(0.16) $(0.59) $17.30 9.86%+ $232,328
1994(1) 16.47 0.25 0.03 (0.25) -- 16.50 1.70%+ 154,949
RETAIL CLASS A
1995* $16.51 $0.17 $ 1.37 $(0.15) $(0.59) $17.31 9.80%+ $ 9,717
1994 16.00 0.31 1.00 (0.30) (0.50) 16.51 8.35% 8,421
1993 14.04 0.22 1.99 (0.23) (0.02) 16.00 15.82% 134,186
1992 13.62 0.24 0.81 (0.29) (0.34) 14.04 7.88% 3,644
1991(8) 10.64 0.28 2.95 (0.22) (0.03) 13.62 30.49%+ 2,386
1990(9) 12.09 0.25 (1.17) (0.25) (0.28) 10.64 (8.22%) 1,161
1989(9) 10.35 0.25 1.70 (0.20) (0.01) 12.09 20.33% 323
1988(9)(10) 10.03 0.27 0.35 (0.30) -- 10.35 6.40%+ 206
RETAIL CLASS B
1995* $16.49 $0.15 $ 1.32 $(0.11) $(0.59) $17.26 9.33%+ $ 1,473
1994(3) 16.65 0.03 (0.10) (0.09) -- 16.49 (0.43%)+ 346
DIVERSIFIED GROWTH
INSTITUTIONAL CLASS
1995* $ 9.10 $0.08 $ 0.84 $(0.08) $ -- $ 9.94 10.19%+ $ 79,275
1994(4) 8.92 0.03 0.18 (0.03) -- 9.10 2.36%+ 31,875
RETAIL CLASS A
1995* $ 9.09 $0.08 $ 0.84 $(0.08) $ -- $ 9.93 10.17%+ $ 1,827
1994(5) 9.39 0.10 (0.29) (0.11) -- 9.09 (2.07%)+ 1,900
1993(6)(7) 10.00 0.11 (0.63) (0.09) -- 9.39 (5.18%)+ 31,084
RETAIL CLASS B
1995* $ 9.09 $0.06 $ 0.82 $(0.05) $ -- $ 9.92 9.70%+ $ 70
1994(3) 8.87 0.01 0.23 (0.02) -- 9.09 2.75%+ 12
SPECIAL EQUITY
INSTITUTIONAL CLASS
1995* $17.30 $0.19 $(0.08) $(0.18) $(1.02) $16.21 1.11%+ $166,545
1994(1) 16.34 0.22 0.96 (0.22) -- 17.30 7.31%+ 128,806
RETAIL CLASS A
1995* $17.30 $0.18 $(0.08) $(0.17) $(1.02) $16.21 1.05%+ $ 8,726
1994 15.81 0.28 2.52 (0.28) (1.03) 17.30 18.70% 7,333
1993 13.61 0.23 2.32 (0.25) (0.10) 15.81 18.91% 81,899
1992 12.98 0.21 1.61 (0.27) (0.92) 13.61 15.17% 3,586
1991(8) 10.33 0.30 2.61 (0.26) -- 12.98 28.38%+ 3,423
1990(9) 12.96 0.47 (2.03) (0.46) (0.61) 10.33 (13.24%) 2,761
1989(9) 11.55 0.47 1.39 (0.41) (0.04) 12.96 17.41% 2,000
1988(9)(10) 10.03 0.34 1.57 (0.39) -- 11.55 19.56%+ 578
RETAIL CLASS B
1995* $17.29 $0.18 $(0.16) $(0.13) $(1.02) $16.16 0.52%+ $ 2,094
1994(3) 16.51 0.01 0.85 (0.08) -- 17.29 5.22%+ 370
REGIONAL EQUITY
INSTITUTIONAL CLASS
1995* $12.52 $0.05 $1.17 $(0.06) $(0.32) $13.36 10.11%+ $120,569
1994(1) 12.41 0.07 0.11 (0.07) -- 12.52 1.46%+ 96,045
RETAIL CLASS A
1995* $12.52 $0.04 $1.17 $(0.05) $(0.32) $13.36 10.06%+ $ 10,008
1994 11.96 0.08 0.71 (0.07) (0.16) 12.52 6.76% 8,345
1993(2) 10.00 0.05 1.96 (0.05) -- 11.96 20.17%+ 58,427
RETAIL CLASS B
1995* $12.50 $0.03 $1.12 $(0.03) $(0.32) $13.30 9.57%+ $ 1,156
1994(3) 12.19 -- 0.33 (0.02) -- 12.50 2.73%+ 185
EMERGING GROWTH
INSTITUTIONAL CLASS
1995* $10.56 $0.02 $0.85 $(0.02) $(0.15) $11.26 8.46%+ $ 21,036
1994(11) 10.00 0.01 0.56 (0.01) -- 10.56 5.68%+ 6,849
RETAIL CLASS A
1995* $10.57 $0.01 $0.85 $(0.02) $(0.15) $11.26 8.25%+ $ 134
1994(11) 10.00 0.01 0.57 (0.01) -- 10.57 5.88%+ 91
RETAIL CLASS B
1995* $10.55 $(0.01) $ 0.82 $-- $(0.15) $11.21 7.87%+ $ 52
1994(3) 9.89 (0.01) 0.67 -- -- 10.55 6.67%+ 18
INTERNATIONAL
INSTITUTIONAL CLASS
1995* $10.22 $ 0.01 $(1.71) $-- $ -- $ 8.52 (16.63)%+ $65,629
1994(11) 10.00 (0.01) 0.23 -- -- 10.22 2.20%+ 47,963
RETAIL CLASS A
1995* $10.21 $ -- $(1.70) $-- $ -- $ 8.51 (16.65)%+ $ 499
1994(12) 9.98 (0.01) 0.24 -- -- 10.21 2.30%+ 464
RETAIL CLASS B
1995* $10.21 $(0.03) $(1.72) $-- $ -- $ 8.46 (17.14)%+ $ 68
1994(3) 10.23 (0.01) (0.01) -- -- 10.21 (0.20)%+ 22
TECHNOLOGY
INSTITUTIONAL CLASS
1995* $11.19 $(0.01) $ 2.03 $-- $(0.23) $12.98 18.29%+ $15,377
1994(11) 10.00 (0.01) 1.20 -- -- 11.19 11.90%+ 6,491
RETAIL CLASS A
1995* $11.19 $(0.01) $ 2.02 $-- $(0.23) $12.97 18.20%+ $ 256
1994(11) 10.00 (0.01) 1.20 -- -- 11.19 11.90%+ 61
RETAIL CLASS B
1995* $11.17 $ -- $ 1.94 $-- $(0.23) $12.88 17.60%+ $ 169
1994(3) 9.85 (0.02) 1.34 -- -- 11.17 13.40%+ 2
(table continued)
RATIO OF NET RATIO OF
INVESTMENT EXPENSES TO
RATIO OF INCOME (LOSS) AVERAGE
EXPENSES TO TO NET ASSETS
AVERAGE AVERAGE (EXCLUDING PORTFOLIO
NET ASSETS NET ASSETS WAIVERS) TURNOVER RATE
0.35% 2.49% 0.96% 2%
0.35 2.59 1.03 11
0.51% 2.34% 1.21% 2%
0.35 2.23 1.23 11
0.35 2.52 1.30 1
1.35% 1.50% 1.96% 2%
1.35 1.68 2.03 11
0.75% 4.45% 1.09% 7%
0.75 5.61 1.14 108
0.82% 4.21% 1.34% 7%
0.88 4.88 1.39 108
0.75 6.09 1.36 68
1.75% 4.15% 2.09% 7%
1.75 4.39 2.14 108
0.78% 2.21% 0.97% 22%
0.75 2.28 1.01 65
0.93% 2.04% 1.22% 22%
0.76 1.51 1.20 65
0.75 1.94 1.28 48
1.45 1.75 4.46 39
1.45 2.47 7.42 76
1.45 2.24 9.47 41
1.24 2.26 36.39 74
1.02 2.67 28.60 80
1.78% 1.31% 1.97% 22%
1.75 1.58 2.01 65
0.75% 1.92% 1.06% 11%
0.75 2.37 1.08 101
0.83% 1.76% 1.31% 11%
0.90 1.15 1.33 101
0.78 1.26 1.25 5
1.75% 1.03% 2.06% 11%
1.75 1.20 2.08 101
0.85% 2.47% 0.98% 38%
0.79 1.93 1.03 116
1.00% 2.30% 1.23% 38%
0.81 1.88 1.23 116
0.81 2.07 1.31 104
1.50 1.61 4.18 146
1.50 2.60 5.13 116
1.50 4.09 4.21 113
1.38 4.07 8.68 102
1.20 4.02 15.60 51
1.85% 1.54% 1.98% 38%
1.68 0.47 2.03 116
0.83% 0.83% 0.98% 18%
0.80 0.82 1.05 41
0.98% 0.68% 1.23% 18%
0.82 0.59 1.25 41
0.80 0.59 1.30 28
1.83% (0.13)% 1.98% 18%
1.80 (0.41) 2.05 41
0.82% 0.31% 1.49% 17%
0.80 0.23 2.59 19
0.91% 0.22% 1.74% 17%
0.79 0.23 2.84 19
1.82% (0.70)% 2.49% 17%
1.80 (0.85) 3.59 19
1.75% 0.08% 1.91% 23%
1.75 (0.19) 2.05 16
1.85% (0.10)% 2.02% 23%
1.75 (0.26) 2.30 16
2.75% (0.95)% 2.97% 23%
2.75 (0.71) 3.05 16
0.84% (0.20)% 1.53% 28%
0.80 (0.21) 3.12 43
0.98% (0.30)% 1.84% 28%
0.80 (0.21) 3.37 43
1.84% (0.99)% 2.59% 28%
1.80 (1.44) 4.12 43
</TABLE>
+ Returns, excluding sales charges, are for the period indicated and have not
been annualized.
* All ratios for the period have been annualized.
(1) Institutional Class shares have been offered since February 4, 1994. All
ratios for the period have been annualized.
(2) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(3) Retail Class B shares have been offered since August 15, 1994. All ratios
for the period have been annualized.
(4) Institutional Class shares have been offered since August 2, 1994. All
ratios for the period have been annualized.
(5) On April 28, 1994 the Board of Directors of FAMF approved a change in
FAMF's fiscal year end from November 30 to September 30, effective
September 30, 1994. All ratios for the period have been annualized.
(6) For the period ended November 30.
(7) Commenced operations on December 18, 1992. All ratios for the period have
been annualized.
(8) On September 3, 1991, the Board of Directors of FAIF approved a change in
the FAIF's fiscal year end from October 31 to September 30, effective
September 30, 1991. All ratios for the period have been annualized.
(9) For the period ended October 31.
(10) Commenced operations on December 22, 1987. All ratios for the period have
been annualized.
(11) Commenced operations on April 4, 1994. All ratios for the period have been
annualized.
(12) Retail Class A shares have been offered since April 7, 1994. All ratios for
the period have been annualized.
NOTES TO FINANCIAL STATEMENTS----MARCH 31, 1995 (Unaudited)
1 ORGANIZATION
First American Limited Tax Free Income Fund (formerly Boulevard Managed
Municipal Fund), Intermediate Tax Free Fund (formerly Municipal Bond Fund),
Minnesota Insured Intermediate Tax Free Fund, Colorado Intermediate Tax Free
Fund, Limited Term Income Fund, Intermediate Term Income Fund, Intermediate
Government Bond Fund (formerly Government Bond Fund), Fixed Income Fund,
Mortgage Securities Fund, Asset Allocation Fund, Balanced Fund, Limited
Volatility Stock Fund, Equity Index Fund, Equity Income Fund (formerly
Boulevard Strategic Balanced Fund), Stock Fund, Diversified Growth (formerly
Boulevard Blue-Chip Growth Fund), Special Equity Fund, Regional Equity Fund,
Emerging Growth Fund, International Fund, Technology Fund, and Real Estate
Securities Fund are registered under the Investment Company Act of 1940, as
amended, as open end, management investment companies. The Real Estate
Securities Fund was not in operation at March 31, 1995. The Funds' articles
of incorporation permit the Board of Directors to create additional funds in
the future.
The Funds offer three classes of shares: the Institutional Class C Shares,
the Retail Class A Shares, and the Retail Class B Shares. Each class is sold
pursuant to different sales arrangements and bear different expenses.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
Security Valuation -- Investment securities of the Funds which are listed on
a securities exchange for which market quotations are available are valued by
an independent pricing service at the last quoted sales price for such
securities on each business day. If there is no such reported sale, these
securities and unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price. Debt obligations
with sixty days or less remaining until maturity may be valued at their
amortized cost. Under this valuation method, purchase discounts and premiums
are accreted and amortized ratably to maturity and are included in interest
income. Foreign securities are valued based upon quotation from the primary
market in which they are traded. When market quotations are not readily
available, securities are valued at fair value as determined in good faith by
procedures established by the Board of Directors.
Security Transactions and Investment Income -- The Funds record security
transactions on the trade date, the date the securities are purchased or
sold. Dividend income is recorded on the ex-dividend date. Interest income,
including amortization of bond premium and discount, is recorded on the
accrual basis. Security gains and losses are determined on the basis of
identified cost, which is the same basis used for Federal income tax
purposes.
Distributions to Shareholders -- Limited Tax Free Income Fund, Intermediate
Tax Free Fund, Minnesota Insured Intermediate Tax Free Fund, Colorado
Intermediate Tax Free Fund, Limited Term Income Fund, Intermediate Term
Income Fund, Intermediate Government Bond Fund, Fixed Income Fund, Mortgage
Securities Fund, Asset Allocation Fund, Balanced Fund, Limited Volatility
Stock Fund, Equity Index Fund, Equity Income Fund, Stock Fund, Diversified
Growth, and Special Equity Fund declare and pay income dividends monthly.
Regional Equity Fund, Emerging Growth Fund and Technology Fund declare and
pay income dividends quarterly. International Fund declares and pays
dividends annually. Any net realized capital gains on sales of securities for
a fund are distributed to shareholders at least annually.
Federal Taxes -- It is each Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required. For Federal
income tax purposes required distributions related to realized gains from
security transactions are computed as of October 31st.
Futures Transactions -- In order to gain exposure to or protect against
changes in the market, certain Funds may enter into S&P Stock Index futures
contracts and other stock futures contracts.
Upon entering into a futures contract, the Fund is required to deposit cash
or pledge "U.S." Government securities in an amount equal to five percent of
the purchase price indicated in the futures contract (initial margin).
Subsequent payments, which are dependent on the daily fluctuations in the
value of the underlying security or securities, are made or received by the
Fund each day (daily variation margin) and are recorded as unrealized gains
or losses until the contracts are closed. When the contracts are closed, the
Fund records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transaction and the Fund's basis in
the contracts. Risks of entering into futures contracts include the
possibility that there will not be a perfect price correlation between the
futures contracts and the underlying securities. Second, it is possible that
a lack of liquidity for futures contracts could exist in the secondary
market, resulting in an inability to close a futures position prior to its
maturity date. Third, the purchase of a futures contract involves the risk
that a Fund could lose more than the original margin deposit required to
initiate a futures transaction. Unrealized gains or losses on outstanding
positions in futures contracts held at the close of the year will be
recognized as capital gains or losses for Federal income tax purposes.
Repurchase Agreements -- The Funds may enter into repurchase agreements with
member banks of the Federal Deposit Insurance Company or registered broker
dealers whom the Adviser or Sub-Adviser deems creditworthy under guidelines
approved by the Board of Directors, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The
repurchase price would generally equal the price paid by the Fund plus
interest negotiated on the basis of current short-term rates.
Securities pledged as collateral for repurchase agreements are held by the
custodian bank until the respective agreements mature. The Portfolios may
also invest in tri-party repurchase agreements. Securities held as collateral
for tri-party repurchase agreements are maintained in a segregated account by
the broker's custodian bank until the maturity of the repurchase agreement.
Provisions of the repurchase agreements ensure that the market value of the
collateral, including accrued interest thereon, is sufficient in the event of
default of the counterparty. If the counterparty defaults and the value of
the collateral declines or if the counterparty enters an insolvency
proceeding, realization of the collateral by the Funds may be delayed or
limited.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities which have been purchased by a Fund on a forward commitment or
when-issued basis can take place up to a month or more after the transaction
date. During this period, such securities are subject to market fluctuations
and the portfolio maintains, in a segregated account with its custodian,
assets with a market value equal to or greater than the amount of its
purchase commitments.
Foreign Currency Translation -- The books and records of the International
Fund are maintained in U.S. dollars on the following bases:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The International Fund does not isolate that portion of gains and losses on
investments in equity securities which is due to changes in the foreign
exchange rates from that which is due to change in market prices of equity
securities.
The International Fund reports certain foreign currency related transactions
as components of realized gains for financial reporting purposes, whereas
such components are treated as ordinary income for Federal income tax
purposes.
Forward Foreign Currency Contracts -- The International Fund enters into
forward foreign currency contracts as hedges against either specific
transactions or fund positions. The aggregate principal amount of the
contracts are not recorded as the International Fund intends to settle the
contracts prior to delivery. All commitments are "marked-to-market" daily at
the applicable foreign exchange rate and any resulting unrealized gains or
losses are recorded currently. The International Fund realizes gains or
losses at the time the forward contracts are extinguished. Unrealized gains
or losses on outstanding positions in forward foreign currency contracts held
at the close of the year will be recognized as ordinary income or loss for
Federal income tax purposes.
Expenses -- Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses are prorated to the
Funds on the basis of relative net asset value. Class specific expenses, such
as the 12b-1 fees, are borne by that class. Income, other expenses and
realized and unrealized gains and losses of a Fund are allocated to the
respective class on the basis of the relative net asset value each day.
3 INVESTMENT SECURITY TRANSACTIONS
During the period ended March 31, 1995, purchases of securities and proceeds
from sales of securities, other than temporary investments in short-term
securities, were as follows (000):
U.S. GOVERNMENT OTHER INVESTMENT
SECURITIES SECURITIES
PURCHASES SALES PURCHASES SALES
Limited Term Tax Free
Income Fund $ $ $ 4,329 $ 6,605
Intermediate Tax
Free Fund -- -- 29,678 8,604
Minnesota Insured
Intermediate Tax
Free Fund -- -- 51,239 7,301
Colorado Intermediate
Tax Free Fund -- -- 38,456 2,024
Limited Term Income Fund 1,002 -- 63,040 45,539
Intermediate Term
Income Fund 17,573 9,200 1,929 1,558
Intermediate Government
Bond Fund 59,204 5,700 -- --
Fixed Income Fund 86,613 38,285 22,830 739
Mortgage Securities Fund 4,936 3,460 0 320
Asset Allocation Fund 16,546 21,797 4,230 12,114
Balanced Fund 21,213 17,382 27,970 19,220
Limited Volatility Stock Fund -- -- 14,899 2,323
Equity Index Fund -- -- 2,646 10,246
Equity Income Fund -- -- 23,551 2,061
Stock Fund -- -- 91,691 39,660
Diversified Growth Fund -- -- 45,743 5,590
Special Equity Fund -- -- 73,950 44,033
Regional Equity Fund -- -- 36,293 18,206
Emerging Growth Fund -- -- 13,913 1,971
International Fund -- -- 38,678 12,099
Technology Fund -- -- 10,109 2,936
At March 31, 1995 the total cost of securities for Federal Income Tax
purposes, was not materially different from amounts reported for financial
reporting purposes. The aggregate gross unrealized appreciation and
depreciation for securities held by the Funds at March 31, 1995 is as follows
(000):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
GROSS GROSS
APPRECIATION DEPRECIATION NET
<S> <C> <C> <C>
Limited Term Tax Free Income Fund $ 42 $ (36) $ 6
Intermediate Tax Free Fund 689 (17) 672
Minnesota Insured Intermediate
Tax Free Fund 1,537 (76) 1,461
Colorado Intermediate Tax Free
Fund 1,421 (2) 1,419
Limited Term Income Fund 126 (1,873) (1,747)
Intermediate Term Income Fund 391 (1,478) (1,087)
Intermediate Government Bond
Fund 911 (171) 740
Fixed Income Fund 2,860 (730) 2,130
Mortgage Securities Fund 104 (995) (891)
Asset Allocation Fund 3,345 (752) 2,593
Balanced Fund 13,407 (2,732) 10,675
Limited Volatility Stock Fund 1,044 (176) 868
Equity Index Fund 25,117 (6,969) 18,148
Equity Income Fund 2,573 (595) 1,978
Stock Fund 27,150 (2,081) 25,069
Diversified Growth Fund 7,805 (1,046) 6,759
Special Equity Fund 10,034 (3,439) 6,595
Regional Equity Fund 24,417 (6,723) 17,694
Emerging Growth Fund 2,425 (850) 1,575
International Fund 2,446 (8,988) (6,542)
Technology Fund 2,554 (497) 2,057
</TABLE>
4 FEES AND EXPENSES
Pursuant to an investment advisory agreement (the Agreement), First Bank
National Association (the Adviser) manages each Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Agreement
requires each Fund to pay the Adviser a monthly fee based upon average daily
net assets. The fee for all funds, other than the International Fund, is
equal to an annual rate of .70% of the average daily net assets. The fee for
the International Fund is equal to an annual rate of 1.25% of average daily
net assets. Through a separate contractual agreement, First Trust National
Association, an affiliate of the Adviser, serves as the Funds' custodian.
Marvin & Palmer Associates, Inc., serves as Sub-Adviser to the International
Fund pursuant to a Sub-Advisory Agreement with the Adviser.
SEI Financial Services Company (SFS) and SEI Financial Management
Corporation, (SFM) serve as distributor and administrator of the Funds,
respectively. Under the distribution plan, each of the Funds pay SFS a
monthly distribution fee of .25% of each Fund's average daily net assets of
the Retail class A shares and 1.00% of the Retail class B shares, which may
be used by SFS to provide compensation for sales support and distribution
activities. SFM provides administrative services, including certain
accounting, legal and shareholder services, at an annual rate of .12% of each
Fund's average daily net assets, with a minimum annual fee of $50,000 per
Fund.
In addition to the investment advisory and management fees, custodian fees,
distribution fees, administrator and transfer agent fees, each fund is
responsible for paying most other operating expenses including organization
costs, fees and expenses of outside directors, registration fees, printing
shareholder reports, legal, auditing, insurance and other miscellaneous
expenses.
During the period ended March 31, 1995, the Adviser and other parties waived
a portion of their contractual fees in order to assist the Funds in
maintaining a competitive expense ratio. Expenses were waived as follows
(000):
<TABLE>
<CAPTION>
WAIVER OF
INVESTMENT WAIVER OF WAIVER OF
ADVISORY ADMINISTRATOR DISTRIBUTION
FEES FEES FEES (1)
<S> <C> <C> <C>
Limited Term Tax Free
Income Fund $ 54 $-- $ 1
Intermediate Tax Free Fund 57 -- 1
Minnesota Insured
Intermediate Tax Free Fund 79 -- 2
Colorado Intermediate
Tax Free Fund 69 -- 1
Limited Term Income Fund 151 12 12
Intermediate Term
Income Fund 95 11 3
Intermediate Government
Bond Fund 102 6 3
Fixed Income Fund 206 20 6
Mortgage Securities Fund 48 -- --
Asset Allocation Fund 45 7 --
Balanced Fund 119 21 7
Limited Volatility
Stock Fund 27 -- --
Equity Index Fund 485 17 --
Equity Income Fund 57 -- 1
Stock Fund 170 20 4
Diversified Growth Fund 84 6 1
Special Equity Fund 73 21 4
Regional Equity Fund 69 16 4
Emerging Growth Fund 44 -- --
International Fund 42 5 1
Technology Fund 41 -- --
</TABLE>
(1) Retail class A
For the period ended March 31, 1995, legal fees and expenses were paid to a law
firm of which the secretary of the funds is a partner.
Effective April 14, 1995, Supervised Service Company was acquired by DST
Systems, Inc. DST Systems, Inc. now provides transfer agent services for the
Funds.
A Contingent Deferred Sales Charge (CDSL) is imposed on redemptions made in
the Retail Class B. The CDSL varies depending on the number of years from
time of payment for the purchase of Class B shares until the redemption of
such shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE
YEAR SINCE AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
First 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
</TABLE>
For the period ended March 31, 1995, sales charges retained by SFS for
distributing the Funds' shares were approximately $28,000.
5 DEFERRED ORGANIZATIONAL COSTS
The Funds incurred organization expenses in connection with their start-up
and initial registration. These costs were allocated equally to each fund and
are being amortized over 60 months on a straight-line basis.
6 FORWARD FOREIGN CURRENCY CONTRACTS
The Portfolios enter into forward foreign currency exchange contracts as
hedges against portfolio positions. Such contracts, which protect the value
of the Portfolio's investment securities against a decline in the value of
the hedged currency, do not eliminate fluctuations in the underlying prices
of the securities. They simply establish an exchange rate at a future date.
Also, although such contracts tend to minimize the risk of loss due to a
decline in the value of a hedged currency, at the same time they tend to
limit any potential gain that might be realized should the value of such
foreign currency increase.
The following forward foreign currency contracts were outstanding at March 31,
1995.
INTERNATIONAL FUND
NET
CONTRACTS TO IN UNREALIZED
DELIVER/ EXCHANGE APPRECIATION/
SETTLEMENT RECEIVE FOR (DEPRECIATION)
DATES (000) (000) (000)
Foreign Currency
Sales 4/13/95 CH 560 $ 472 $ (23)
4/13/95 CH 610 518 (21)
4/13/95 DM 1,240 873 (29)
4/13/95 DM 1,450 1,026 (29)
4/13/95 UK 590 931 (24)
4/13/95 UK 750 1,189 (26)
4/13/95 UK 340 541 (10)
4/13/95 IT 1,064,200 629 4
4/13/95 IT 957,000 567 4
4/13/95 JY 365,840 4,011 (212)
4/13/95 JY 327,110 3,586 (189)
4/13/95 SK 12,510 1,717 24
4/13/95 SK 13,270 1,828 32
$17,888 $(499)
Foreign Currency
Purchases 4/3/95 SG 215 $ 152 $ 1
4/5/95 MY 267 105 1
4/11/95 UK 19 30 --
4/13/95 IT 267,900 157 1
4/13/95 JY 354,810 4,103 (8)
4/13/95 DM 1,240 906 (4)
4/13/95 DM 10 7 --
$ 5,460 $ (9)
$(508)
CURRENCY LEGEND
CH Swiss Francs
DM German Marks
IT Italian Lira
JY Japanese Yen
MY Malaysian Ringett
SG Singapore Dollar
SK Swedish Krona
UK British Pounds Sterling
7 FUTURES CONTRACTS
The Equity Index Portfolio's investment in S&P 500 Index futures contracts is
designed to assist the Portfolio in more closely approximating the
performance of the S&P 500 Index. Risks of entering into S&P 500 Index
futures contracts include the possibility that there may be an illiquid
market and that a change in the value of the contract may not correlate with
changes in the value of the underlying securities. Should the S&P 500 Index
move unexpectedly, the Portfolio may not receive the anticipated benefits
from the S&P 500 Index futures contracts and may realize a loss. At March 31,
1995, open S&P 500 Index futures contracts were as follows:
<TABLE>
<CAPTION>
NUMBER UNREALIZED
OF TRADE SETTLEMENT GAIN
CONTRACTS PRICE MONTH (000)
<S> <C> <C> <C>
32 $497.10 JUNE 1995 $117
2 499.05 June 1995 5
1 494.50 June 1995 5
1 499.65 June 1995 3
$130
</TABLE>
8 CONCENTRATION OF CREDIT RISK
The Limited Term Tax Free Income Fund, Intermediate Tax Free Fund, Minnesota
Insured Intermediate Tax Free Fund, and Colorado Intermediate Tax Free Fund
invest in debt instruments of municipal issuers. Although these Funds
maintain a diversified portfolio, the issuers ability to meet their
obligations may be affected by economic developments in a specific state or
region.
The Limited Term Tax Free Income Fund, Intermediate Tax Free Fund, Minnesota
Insured Intermediate Tax Free Fund, and Colorado Intermediate Tax Free Fund
invest in securities which include revenue bonds, tax and revenue
anticipation notes, and general obligation bonds. At March 31, 1995, the
percentage of portfolio investments by each revenue source was as follows:
LIMITED MINNESOTA COLORADO
TERM INTERMEDIATE INSURED INTERMEDIATE
TAX FREE TAX FREE INTERMEDIATE TAX FREE
FUND FUND TAX FREE FUND FUND
REVENUE BONDS:
Education Bonds 1% 7% 5% 5%
Health Care Bonds 5 11 17 4
Transportation Bonds 13 1 2 4
Utility Bonds 18 18 6 6
Housing Bonds 12 12 25 5
Pollution Control Bonds -- 5 6 2
Industrial Bonds 3 -- -- 1
Other 9 17 8 22
GENERAL OBLIGATIONS 34 29 25 51
TAX AND REVENUE
ANTICIPATION NOTES 5 -- 6 --
100% 100% 100% 100%
The rating of long-term debt as a percentage of total value of investments at
March 31, 1995 is as follows:
LIMITED MINNESOTA COLORADO
TERM INTERMEDIATE INSURED INTERMEDIATE
TAX FREE TAX FREE INTERMEDIATE TAX FREE
FUND FUND TAX FREE FUND FUND
STANDARD & POORS RATINGS:
AAA 29% 53% 67% 58%
AA 18 20 -- 19
AA+ 7 1 6 --
AA- 2 9 9 --
A+ 7 5 5 3
A 9 2 -- 5
A- 2 -- -- --
BBB+ 3 -- -- --
BBB -- -- -- 1
NR 23 10 13 14
100% 100% 100% 100%
9 ACQUISITION OF FIRST AMERICAN MUTUAL FUND MANAGED INCOME FUND
On February 3, 1995 Limited Term Income acquired all net assets of First
American Mutual Fund (FAMF) Managed Income pursuant to a plan of
reorganization approved by the FAMF shareholders on December 16, 1994. The
acquisition was accompanied by a tax-free exchange of 4,042,254 Shares of
Managed Income Fund Institutional Class for 3,916,789 shares of Limited Term
Income Fund Institutional Class, and 482,125 Shares of Managed Income Retail
Class A for 467,263 shares of Limited Term Income Retail Class A outstanding
as of the close of business on February 3, 1995. Managed Income Fund net
assets at the date were combined with those of Limited Term Income Fund. The
aggregate net assets of Limited Term Income Fund and Managed Income Fund
before the acquisition were $77,167,375 and $42,885,635 respectively.
In addition, under the reorganization agreement the FAMF Limited Term Tax
Free Income, FAMF Equity Income, and FAMF Diversified Growth Funds, were
merged into a new FAIF fund which was identical to the respective FAMF fund.
FIRST AMERICAN INVESTMENT FUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Investment Adviser
FIRST BANK NATIONAL ASSOCIATION
601 Second Avenue South
Minneapolis, Minnesota 55402
Custodian
FIRST TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
Administrator
SEI FINANCIAL MANAGEMENT CORPORATION
680 East Swedesford Road
Wayne, Pennsylvania 19087
Transfer Agent
DST SYSTEMS, INC.
811 Main Street
Kansas City, Missouri 64105
Distributor
SEI FINANCIAL SERVICES COMPANY
680 East Swedesford Road
Wayne, Pennsylvania 19087
Independent Auditors
KPMG PEAT MARWICK LLP
90 South Seventh Street
Minneapolis, Minnesota 55402
Counsel
DORSEY & WHITNEY P.L.L.P.
220 South Sixth Street
Minneapolis, Minnesota 55402
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the corporation. The report is
not authorized for distribution to prospective investors in the corporation
unless preceded or accompanied by an effective prospectus for each of the
Funds included. Shares in the Funds are not deposits or obligations of, or
guaranteed or endorsed by, First Bank National Association or any of its
affiliates. Such shares are also not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
Investment in the shares involve investment risk including loss of principal
amount invested.
FAIF-1303 5/95
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
The first four paragraphs of Item 27 of Part C of Pre-Effective Amendment
No. 1 to the Registrant's Registration Statement on Form N-1A, dated November
27, 1987, are incorporated herein by reference.
On February 18, 1988 the indemnification provisions of the Maryland General
Corporation Law (the "Law") were amended to permit, among other things,
corporations to indemnify directors and officers unless it is proved that the
individual (1) acted in bad faith or with active and deliberate dishonesty, (2)
actually received an improper personal benefit in money, property or services,
or (3) in the case of a criminal proceeding, had reasonable cause to believe
that his act or omission was unlawful. The Law was also amended to permit
corporations to indemnify directors and officers for amounts paid in settlement
of stockholders' derivative suits.
The Registrant undertakes that no indemnification or advance will be made
unless it is consistent with Sections 17(h) or 17(i) of the Investment Company
Act of 1940, as now enacted or hereafter amended, and Securities and Exchange
Commission rules, regulations, and releases (including, without limitation,
Investment Company Act of 1940 Release No. 11330, September 2, 1980).
Insofar as the indemnification for liability arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
The Registrant maintains officers' and directors' liability insurance
providing coverage, with certain exceptions, for acts and omissions in the
course of the covered persons' duties as officers and directors.
ITEM 16. EXHIBITS.
1 Articles of Incorporation, as amended and supplemented through January
1995. (Incorporated by reference to Exhibit (1) to Post-Effective
Amendment No. 21 to the Registrant's Registration Statement on Form
N-1A, File No. 33-16905.)
2 Bylaws, as amended through January 1995. (Incorporated by reference to
Exhibit (2) to Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, File No. 33-16905.)
3 Not Applicable.
4 Agreement and Plan of Reorganization is attached as Exhibit A to the
Prospectus/Proxy Statement included in Part A of this Registration
Statement on Form N-14.
5 Not Applicable.
6 Investment Advisory Agreement dated April 2, 1991, between Registrant
and First Bank National Association, as amended and supplemented
through August 1994. (Incorporated by reference to Exhibit (5)(a) to
Post-Effective Amendment No. 21 to the Registrant's Registration
Statement o Form N-1A, File No. 33-16905.)
7(a) Distribution Agreement [Class A and Class C] dated February 10, 1994
between Registrant and SEI Financial Services Company. (Incorporated
by reference to Exhibit (6)(a) to Post-Effective Amendment No. 21 to
the Registrant's Registration Statement on Form N-1A, File No. 33-1690
7(b) Distribution and Service Agreement [Class B] dated August 1, 1994, as
amended September 14, 1994 between Registrant and SEI Financial
Services Company. (Incorporated by reference to Exhibit (6)(b) to
Post-Effective Amendment No. 21 to the Registrant's Registration
Statement on Form N-1A, File No. 33-16905.)
7(c) Form of Dealer Agreement. (Incorporated by reference to Exhibit (6)(c)
to Post-Effective Amendment No. 21 to the Registrant's Registration
Statement on Form N-1A, File No. 33-16905.)
8 Not Applicable.
9 Custodian Agreement dated September 20, 1993, between Registrant and
First Trust National Association, as supplemented through August 1994.
(Incorporated by reference to Exhibit (8) to Post-Effective Amendment
No. 21 to the Registrant's Registration Statement on Form N-1A, File N
33-16905.)
(10)(a) Form of Distribution Plan [Class A]. (Incorporated by reference to
Exhibit (15)(a) to Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, File No. 33-16905.)
(10)(b) Class B Distribution Plan. (Incorporated by reference to Exhibit
(15)(b) to Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, File No. 33-16905.)
(10)(c) Service Plan [Class B]. (Incorporated by reference to Exhibit
(15)(c)) to Post-Effective Amendment No. 21 to the Registrant's
Registration Statement on Form N-1A, File No. 33-16905.)
(10)(d) Multiple Class Plan Pursuant to Rule 18f-3. (Incorporated by
reference to Exhibit (18) to Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A, File No. 33-16905.)
*11(a) Opinion and Consent of Dorsey & Whitney P.L.L.P. with respect to the
legality of the securities being registered.
*11(b) Opinion and Consent of Ober, Kaler, Grimes & Shriver, A Professional
Corporation, with respect to matters of Maryland law.
*12 Opinion and Consent of Dorsey & Whitney P.L.L.P. with respect to tax
matters.
13(a) Administration Agreement dated as of January 1, 1995 between
Registrant and SEI Financial Management Corporation. (Incorporated by
reference to Exhibit (9)(a) to Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A, File No. 33-16905.)
13(b) Transfer Agency Agreement dated as of March 31, 1994, between
Registrant and Supervised Service Company, Inc. (Incorporated by
reference to Exhibit (9)(b) to Post-Effective Amendment No. 21 to the
Registrant's Registration Statement on Form N-1A, File No. 33-16905.)
*14 Consent of KPMG Peat Marwick LLP.
15 Not Applicable.
*16 Powers of Attorney of Directors signing the Registration Statement.
*17(a) Rule 24f-2 Election of Registrant.
*17(b) Form of Proxy Card.
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has
been signed on behalf of the registrant, in the City of Wayne, Commonwealth of
Pennsylvania, on the 1st day of November, 1995.
FIRST AMERICAN INVESTMENT FUNDS, INC.
ATTEST: /s/ Stephen G. Meyer By: /s/ David G. Lee
Stephen G. Meyer David G. Lee, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity and on the dates indicated.
Signature Title Date
/s/ Stephen G. Meyer Controller (Principal **
Stephen G. Meyer Financial and Accounting Officer)
* Director **
Robert J. Dayton
* Director **
Welles B. Eastman
* Director **
Irving D. Fish
* Director **
Leonard W. Kedrowski
* Director **
Joseph D. Strauss
* Director **
Virginia L. Stringer
* Director **
Gae B. Veit
* By: /s/ Kathryn L. Stanton
Kathryn L. Stanton
Attorney in Fact
** November 1, 1995.
EXHIBIT 11(a)
DORSEY & WHITNEY P.L.L.P.
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
November 1, 1995
First American Investment Funds, Inc.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Re: First American Investment Funds, Inc. Shares to be Issued Pursuant to
Agreement and Plan of Reorganization
Ladies and Gentlemen:
We have acted as counsel to First American Investment Funds, Inc., a
Maryland corporation ("FAIF"), in connection with FAIF's authorization and
proposed issuance of its Class D (also known as "Stock Fund") common shares, par
value $.0001 per share (the "Shares"). The Shares are to issued pursuant to an
Agreement and Plan of Reorganization (the "Agreement"), by and between Stock
Fund, a series of FAIF (the "Acquiring Fund"), and Limited Volatility Stock
Fund, another series of FAIF (the "Acquired Fund"), the form of which Agreement
is included as Exhibit 1 to the Prospectus/Proxy Statement relating to the
transactions contemplated by the Agreement included in the FAIF's Registration
Statement on Form N-14 filed with the Securities and Exchange Commission (the
"Registration Statement").
In rendering the opinions hereinafter expressed, we have reviewed the
corporate proceedings taken by FAIF in connection with the authorization and
issuance of the Shares, and we have reviewed such questions of law and examined
copies of such corporate records of FAIF, certificates o public officials and of
responsible officers of FAIF, and other documents as we have deemed necessary as
a basis for such opinions. As to the various matters of fact material to such
opinions, we have, when such facts were not independently established, relied to
the extent we deem proper on certificates of public officials and of responsible
officers of FAIF. In connection with such review and examination, we have
assumed that all copies of documents provided to us conform to the originals;
that all signatures are genuine; and that prior to the consummation of the
transactions contemplated thereby, the Agreement will have been duly and validly
executed and delivered on behalf of each of the parties thereto in substantially
the form included in the Registration Statement.
Based on the foregoing, it is our opinion that:
1. FAIF is validly existing as a corporation in good standing under the
laws of the State of Maryland.
2. The Shares, when issued and delivered by the Acquiring Fund pursuant to,
and upon satisfaction of the conditions contained in, the Agreement, will be
duly authorized, validly issued, fully paid and non-assessable.
In rendering the foregoing opinions (a) we express no opinion as to the
laws of any jurisdiction other than the State of Maryland; (b) we have assumed,
with your concurrence, that the conditions to closing set forth in the Agreement
will have been satisfied; and (c) we have relied, with your concurrence, as to
matters of Maryland law, on the opinion of Ober, Kaler, Grimes & Shriver, A
Professional Corporation, addressing the foregoing issues.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in FAIF's final Prospectus/Proxy Statement relating to the
Shares included in the Registration Statement.
Very truly yours,
/s/ Dorsey & Whitney P.L.L.P.
JDA
EXHIBIT 11(b)
OBER, KALER, GRIMES & SHRIVER
A PROFESSIONAL CORPORATION
120 EAST BALTIMORE STREET
BALTIMORE, MARYLAND 21202-1643
(410) 685-1120
October 30, 1995
Dorsey & Whitney P.L.L.P.
220 South Sixth Street
Minneapolis, Minnesota 55402
Re: First American Investment Funds, Inc./
Shares to be Issued Pursuant to Agreement and Plan of Reorganization
Ladies and Gentlemen:
We have acted as special Maryland counsel to First American Investment
Funds, Inc., a Maryland corporation ("FAIF"), in connection with FAIF's
authorization and proposed issuance of its Class D (also known as "Stock Fund")
common shares, par value $.0001 per share (the "Shares"). The Shares are to be
issued pursuant to an Agreement and Plan of Reorganization (the "Agreement"), by
and between Stock Fund, a series of FAIF (the "Acquiring Fund"), and Limited
Volatility Stock Fund, another series of FAIF (the "Acquired Fund"), the form of
which Agreement is included as Exhibit 1 to the Prospectus/Proxy Statement
relating to the transactions contemplated by the Agreement included in the
FAIF's Registration Statement on Form N-14 filed with the Securities and
Exchange Commission (the "Registration Statement").
In rendering the opinions hereinafter expressed, we have reviewed the
corporate proceedings taken by FAIF in connection with the authorization and
issuance of the Shares, and we have reviewed such questions of law and examined
copies of such corporate records of FAIF, certificates of public officials and
of responsible officers of FAIF, and other documents as we have deemed necessary
as a basis for such opinions. As to the various matters of fact material to such
opinions, we have, when such facts were not independently established, relied to
the extent we deem proper on certificates of public officials and of responsible
officers of FAIF. In connection with such review and examination, we have
assumed that all copies of documents provided to us conform to the originals;
that all signatures are genuine; and that prior to the consummation of the
transactions contemplated thereby, the Agreement will have been duly and validly
executed and delivered on behalf of each of the parties thereto in substantially
the form included in the Registration Statement.
Based on the foregoing, it is our opinion that:
1. FAIF is validly existing as a corporation in good standing under the
laws of the State of Maryland.
2. The Shares, when issued and delivered by the Acquiring Fund pursuant to,
and upon satisfaction of the conditions contained in, the Agreement, will be
duly authorized, validly issued, fully paid and non-assessable.
In rendering the foregoing opinions (a) we express no opinion as to the
laws of any jurisdiction other than the State of Maryland; and (b) we have
assumed, with your concurrence, (i) that the conditions to closing set forth in
the Agreement will have been satisfied; (ii) all Shares previously issued by
FAIF were duly and validly authorized and issued; (iii) the issuance of the
Shares will not result in the issuance of Shares of any class or series of FAIF
in excess of the number of Shares authorized by FAIF's charter; and (iv) at no
time prior to the date that the Shares are issued will the existing corporate
authorization to issue the Shares be amended, repealed or revoked.
You are hereby authorized to rely upon this opinion in rendering your
legality opinion to FAIF to be filed as an exhibit to the Registration
Statement. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in FAIF's final Prospectus/Proxy Statement relating to the
Shares included in the Registration Statement.
Very truly yours,
/s/ Ober, Kaler, Grimes & Shriver
A Professional Corporation
EXHIBIT 12
DORSEY & WHITNEY P.L.L.P.
PILLSBURY CENTER SOUTH
220 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402-1498
November 1, 1995
First American Investment Funds, Inc.
c/o SEI Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
Ladies and Gentlemen:
We have acted as counsel to First American Investment Funds, Inc. ("FAIF")
in connection with the proposed acquisition of all of the assets and all of the
liabilities of Limited Volatility Stock Fund (the "Acquired Fund"), a separately
managed series of FAIF, by Stock Fund (the "Acquiring Fund"), a separately
managed series of FAIF, pursuant to an Agreement and Plan of Reorganization to
be dated on or about November 1, 1995, by and between the Acquired Fund and the
Acquiring Fund (the "Agreement").
You have asked for our opinion concerning certain federal income tax
consequences of the exchange of Acquiring Fund Shares for the assets and
liabilities of the Acquired Fund and the distribution of such shares to Acquired
Fund Shareholders upon liquidation of the Acquired Fund, all pursuant to the
Agreement (the "Reorganization"). In this regard we have examined (1) the
Agreement, (2) the Registration Statement on Form N-14 (including, but not
limited to, the Prospectus and Proxy Statement included therein) to be filed
with the Securities and Exchange Commission on or about November 1, 1995, and
such other documents and records as we consider necessary in order to render
this opinion. Unless otherwise provided herein, capitalized terms used in this
opinion shall have the same meaning as set forth in the Prospectus and Proxy
Statement or the Agreement, as the case may be.
Pursuant to the Agreement, all of the assets and all of the liabilities of
the Acquired Fund as of the Effective Time will be exchanged for that number of
Acquiring Fund Shares equal to the value of the assets, net of liabilities, of
the Acquired Fund at the Effective Time. All Acquiring Fund Shares then held by
the Acquired Fund, representing all of the assets of the Acquired Fund, will be
distributed to Acquired Fund Shareholders pursuant to the Agreement (which
includes the cancellation and retirement of all Acquired Fund Shares). In the
distribution, each Acquired Fund Shareholder will receive Acquiring Fund Shares
of the same class that he or she held in the Acquiring Fund, with a net asset
value equal at the Effective Time to the net asset value of the shareholder's
Acquired Fund Shares as of such time.
The acquisition of all of the assets and all of the liabilities of the
Acquired Fund by the Acquiring Fund is being undertaken because the Board of
Directors of FAIF has determined that the Reorganization will provide certain
benefits to the Acquiring Fund and the Acquired Fund and in the best interests
of each fund and its respective shareholders. In approving the Reorganization,
the Board considered, among other things, the following factors: (1) the
compatibility of the investment objectives, policies and restrictions of the two
funds; (2) advantages which may be realized by the Funds, including a
potentially reduced expense ratio before waivers, economies of scale resulting
from fund growth, and facilitation of portfolio management; (3) the terms and
conditions of the Agreement; (4) the agreement of the Manager to bear the costs
associated with the Reorganization; (5) the fact that the advisory fee, Rule
12b-1 fees and sales charges would remain constant for Acquired Fund
shareholders; (6) the Acquiring Fund's agreements that the former holders of
Acquired Fund Class A and Class B shares would receive credit for the period
during which they held such Acquired Fund Shares in determining the application
of deferred sales charges on the corresponding classes of Acquiring Fund shares
they receive in the Reorganization and, in the case of holders of Class B
shares, for purposes of determining the date of conversion of such shares to
Acquiring Fund Class A shares; and (7) the fact that in no event will the
Acquired Fund Shareholders be subject to a less advantageous total expense "cap"
as a result of the Reorganization.
Our opinion is based upon existing law and currently applicable Treasury
Regulations, currently published administrative positions of the Internal
Revenue Service contained in Revenue Rulings and Revenue Procedures and judicial
decisions, all of which are subject to change prospectively and retroactively.
It is not a guarantee of the current status of the law and should not be
accepted as a guarantee that a court of law or an administrative agency will
concur in the opinion.
Based on the Agreement, the other documents referred to herein, the facts
and assumptions stated above, as well as representations made by FAIF in a
Certificate dated November 1, 1995, representations made by First Bank National
Association in a Certificate dated November 1, 1995, representations made by
First Trust National Association in a Certificate dated November 1, 1995, the
provisions of the Code and judicial and administrative interpretations as in
existence on the date hereof, it is our opinion that the Reorganization will
constitute a reorganization within the meaning of Section 368(a)(1)(C) of the
Code, and that the Acquiring Fund and the Acquired Fund will each be a party to
the reorganization within the meaning of Section 368(b) of the Code.
On the basis of the foregoing opinion that the Reorganization will
constitute a reorganization within the meaning of Section 368 of the Code, it is
further our opinion that:
(i) the holders of Acquired Fund Shares will recognize no income, gain or
loss upon receipt, pursuant to the Reorganization, of Acquiring Fund
Shares. Acquired Fund Shareholders subject to taxation will recognize
income upon receipt of any net investment income or net capital gains
the Acquired Fund which are distributed by the Acquired Fund prior to
the Effective Time;
(ii) the tax basis of Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax
basis of the Acquired Fund Shares exchanged therefor;
(iii) the holding period of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will include
the period during which the Acquired Fund Shareholder held the
Acquired Fund Shares exchanged therefor, provided that the Acquired
Fund Shares were held as a capital asset at the Effective Time;
(iv) the Acquired Fund will recognize no income, gain or loss by reason of
the Reorganization;
(v) the Acquiring Fund will recognize no income, gain or loss by reason of
the Reorganization;
(vi) the tax basis of the assets received by the Acquiring Fund pursuant to
the Reorganization will be the same as the basis of those assets in
the hands of the Acquired Fund as of the Effective Time;
(vii) the holding period of the assets received by the Acquiring Fund
pursuant to the Reorganization will include the period during which
such assets were held by the Acquired Fund; and
(viii) the Acquiring Fund will succeed to and take into account the
earnings and profits, or deficit in earning and profits, of the
Acquired Fund as of the Effective Time.
We consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement on Form N-14 and to the reference to
this firm under the caption "Information About the Reorganization -- Federal
Income Tax Consequences" in the Prospectus/Proxy Statement included Part A of
said Registration Statement.
Very truly yours,
/s/ Dorsey & Whitney P.L.L.P.
EXHIBIT 14
KPMG Peat Marwick LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Independent Auditors' Consent
The Board of Directors
First American Investment Funds, Inc.:
We consent to the use of our report dated November 4, 1994 included in the
Statement of Additional Information of First American Investment Funds, Inc.
dated January 31, 1995 incorporated by reference herein and to the reference to
our Firm under the heading "FINANCIAL STATEMENTS AND EXPERTS" in Part A of this
Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 1, 1995
EXHIBIT 16
FIRST AMERICAN INVESTMENT FUNDS, INC.
POWER OF ATTORNEY -- N-14 REGISTRATION STATEMENT
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Kathryn L. Stanton, Michael J.
Radmer, and Richard J. Shoch, and each of them, his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign a Registration Statement on Form N-14 of First
American Investment Funds, Inc., relating to the combination of Limited
Volatility Stock Fund with and into Stock Fund, and any and all amendments
thereto, including post-effective amendments, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone, or
the substitutes for such attorneys-in-fact and agents, may lawfully do or cause
to be done by virtue hereof.
Signature Title Date
/s/ Robert J. Dayton Director September 13, 1995
Robert J. Dayton
/s/ Welles B. Eastman Director September 13, 1995
Welles B. Eastman
/s/ Irving D. Fish Director September 13, 1995
Irving D. Fish
/s/ Leonard W. Kedrowski Director September 13, 1995
Leonard W. Kedrowski
/s/ Joseph D. Strauss Director September 13, 1995
Joseph D. Strauss
/s/ Virginia L. Stringer Director September 13, 1995
Virginia L. Stringer
/s/ Gae B. Veit Director September 13, 1995
Gae B. Veit
EXHIBIT 17(a)
SEI
680 East Swedesford Road
Wayne, PA 19087-1658
(610) 254-1000
November 16, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: RULE 24F-2 NOTICE FOR FIRST AMERICAN INVESTMENT FUNDS, INC.
SEC FILE #33-16905
Ladies and Gentlemen:
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, you are hereby
notified as follows:
(i) the fiscal year of the Fund for which this Notice is filed is the year
ended September 30, 1994.
(ii) the number of securities of the same class of the Fund which had been
registered under the Securities Act of 1933 other than pursuant to Rule
24f-2 which remained unsold at the beginning of such fiscal year was: 0.
(iii)the number of securities of the Fund registered during such fiscal year
other than pursuant to Rule 24f-2 was: 0.
(iv) the number of securities of the Fund sold during such fiscal year was:
121,764,627.
(v) the number of securities of the Fund sold during such fiscal year in
reliance upon registration pursuant to Rule 24f-2 was: 121,764,726.
This Notice is accompanied by an opinion of counsel as to whether the
securities, the registration of which this Notice makes definite in number, were
legally issued, fully paid and non-assessable as required by paragraphs (b) (1)
(v) and (c), respectively, of Rule 24f-2.
* Pursuant to Rule 24f-2(c), the filing fee accompanying this Notice was
calculated as follows:
(a) actual aggregate sale price of
securities sold pursuant to
Rule 24f-2 during fiscal year
(paragraph (v) above): $1,357,781.818
(b) reduced by the difference
between:
(1) the actual aggregate
redemption price of
securities of the Fund
redeemed by the Fund
during such fiscal year: $1,098,884,934
and
(2) the actual aggregate
redemption price of
such redeemed securities
previously applied pursuant
to Rules 243-2(a) and 24e-1 of
the Act: 0
net redemptions $1,098,884,934
Fee calculated pursuant to Section
6(b) of the Securities Act of 1933: $89,275.41
THIS FEE WILL BE SENT TO THE SEC'S ACCOUNT AT MELLON BANK ON 11/16/94.
Very truly yours,
By: /s/ Jean A. Young
Jean A. Young
Controller
EXHIBIT 17(b)
PROXY
LIMITED VOLATILITY STOCK FUND
(A SERIES OF FIRST AMERICAN INVESTMENT FUNDS, INC.)
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST
AMERICAN INVESTMENT FUNDS, INC.
The undersigned hereby appoints Kathryn L. Stanton, Michael J. Radmer, and
Richard J. Shoch, and each of them, with power to act without the other and with
the right of substitution in each, as proxies of the undersigned and hereby
authorizes each of them to represent and to vote, as designated below, all the
shares of Limited Volatility Stock Fund (the "Acquired Fund"), a series of First
American Investment Funds, Inc. ("FAIF"), held of record by the undersigned on
December 11, 1995, at the Special Meeting of shareholders of the Acquired Fund
to be held on January 22, 1996, or any adjournments or postponements thereof,
with all powers the undersigned would possess if present in person. All previous
proxies given with respect to the Special Meeting hereby are revoked.
THE PROXIES ARE INSTRUCTED TO VOTE AS FOLLOWS:
1. PROPOSAL TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION (the "Plan")
providing for (a) the acquisition of all of the assets and the assumption
of all liabilities of the Acquired Fund by Stock Fund (the "Acquiring
Fund"), a separately managed series of FAIF, in exchange for shares of
common stock of the Acquiring Fund having an aggregate net asset value
equal to the aggregate value of the assets acquired (less the liabilities
assumed) of the Acquired Fund and (b) the liquidation of the Acquired Fund
and the pro rata distribution of the Acquiring Fund shares to Acquired Fund
shareholders. Under the Plan, Acquired Fund shareholders will receive the
same class of shares of the Acquiring Fund that they held in the Acquired
Fund, having a net asset value equal as of the effective time of the Plan
to the net asset value of their Acquired Fund shares. A vote in favor of
the Plan will be considered a vote in favor of an amendment to the articles
of incorporation of FAIF required to effect the reorganization contemplated
by the Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" PROPOSAL 1 ABOVE. RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE PROXY STATEMENT RELATING TO THE MEETING IS ACKNOWLEDGED BY
YOUR EXECUTION OF THIS PROXY.
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS BELOW. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY PARTNER OR OTHER
AUTHORIZED PERSON.
DATED: ________________, 199_
__________________________________
Signature
[SHAREHOLDER INFORMATION]
__________________________________
Signature if held jointly
TO SAVE FURTHER SOLICITATION EXPENSE, PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
